A MFC is a bioreactor that converts the energy stored in chemical bonds in organic compound directly through direct catalytic reactions of microorganism under anaerobic conditions to generate electricity. Microbial Fuel cell (MFC) can be a great demand for waste water treatment in future and alternatively, the increasing demand of energy can be fulfilled by this technique in the future. In this research , a MFC was constructed by using graphite felt immobilized with neutral red as anode and a platinum coated platinum wire as cathode. Anolyte used was municipal wastewater and catholyte was phosphate buffer pH 7. The mixed culture of organism dominantly present in the wastewater was used in MFC. The COD of wastewater was reduced by 69.96% when MFC was run for days. Similarly the level of reducing sugar lowered by 86.66% after several days. MFC showed a open circuit voltage of 513mv on the fifth day and remained almost constant after that day .The maximum power generated was found to be 24.45 w/m3 when 1% H2O2 was supplied as a source of oxygen in the cathode compartment. The result was found to be effective when cellulose acetate was used as membrane compared with the Nafion membrane. Microbial fuel cell technology can be a new approach for wastewater treatment and produce significant power if the efficiency is improved.