The effect of chemical treatment on the magnitude of soluble residual COD in the biological treatment effluent is investigated for knit fabric finishing wastewater. Bentonite is selected for its potential to remove soluble COD together with color and particulate components. Chemical treatment using bentonite, when applied prior to biological treatment removes around 40% of the biodegradable as well as soluble inert COD initially present in the wastewater. As a chemical post-treatment, it acts as a polishing step, removing particulate matter and a minor portion of around 20% of the remaining soluble COD. These findings suggest chemical pre-treatment as a better alternative for the optimization of soluble COD removal.