The disposal of dry olive-mill residue, the waste product from olive oil production, is a serious environmental issue. Dry olive-mill residue, being rich in organic and inorganic nutrients, could be used as fertilizer; however, it contains phenolic compounds that can inhibit plant growth. In order to clarify whether bioremediation of this waste could be a valuable strategy for its reuse, the effect of aqueous extract of dry olive-mill residue, untreated or bioremediated by the saprobe fungi Coriolopsis rigida and Penicillium chrysogenum-10, has been analyzed in relation to some physiological parameters of tomato plants. The data show that aqueous dry olive-mill residue significantly reduces the biomass of roots and shoots. In particular, it causes a dramatic reduction in root length, area, and volume as well as in the number of root tips. At an early stage, aqueous dry olive-mill residue also reduces the content of chlorophyll a and b and the efficiency of PS II. The inhibition of growth seems to be due to the increase in phenolic compounds that induce oxidative stress. Interestingly, when plants are treated with aqueous dry olive-mill residue bioremediated by saprobe fungi a decrease in phenolic content and an alleviation of oxidative stress occur. In conclusion, the results show that bioremediation of aqueous dry olive-mill residue is a useful tool to remove most of the inhibiting effects of this waste on plant growth.