Keratinase is a potential industrial enzyme for handling keratinaceous solid wastes and also a cleaner dehairing alternative to chemical methods in tanneries. The cleaner technologies towards circular economy approach are gaining importance in leather manufacturing sector. In this study, a new bacterial strain Bacillus sp. KLP1, exhibiting high tolerance to sodium chloride and sodium sulphide, was isolated. This new strain was effectively used for degrading the animal hair waste and also as a biocatalyst for removal of hair (dehairing) from sheep skins. The strain completely degraded the hair and produced 2600 U/ml of keratinase under optimized conditions within 72 h. The crude keratinase exhibited an optimal activity at pH 9 and 60 °C. It also showed tolerance to 0.6 M NaCl and 0.012 M Na2S. The keratinolytic protease showed complete hair removal under the industrial conditions at pH 9 within 9 h. In addition, the crude keratinase completely hydrolysed the sheep hair into free amino acids in 16 h. These results clearly show the use of crude keratinase for both dehairing of skins and also hydrolysis of hair to amino acids addressing eco-processing and solid waste management in tanning industry. Thus, the use of the new strain in leather processing leads to sustainable solid waste management and cleaner dehairing process through an environmental-friendly holistic approach alternative to chemical-based leather processing. © 2021, Islamic Azad University (IAU).