Microbial desalination cell (MDC) is a propitious technology towards water desalination by utilizing wastewater as an energy source. In this study, a multi-chambered MDC was used to bioremediate steel plant wastewater using the same wastewater as a fuel for anodic bacteria. A pure culture of Pseudomonas putida MTCC 1194 was isolated and inoculated to remove toxic phenol. Three different inoculum conditions, namely P. putida (INC-A), a mixture of P. putida and activated sludge (INC-B), and activated sludge alone (INC-C) were employed in an anodic chamber to mainly compare the electricity generation and phenol degradation in MDCs. The study revealed the maximum phenol removal of 82 ± 2.4%, total dissolved solids (TDS) removal of 68 ± 1.5%, and power generation of 10.2 mW/m2 using INC-B. The synergistic interactions between microorganisms, can enhance the toxic phenol degradation and also electricity generation in MDC for onsite wastewater application.