The microorganisms thriving in ageing Bauxite residue, or red mud, have captured scientific interest for their adaptability to extreme conditions. This study investigates extremophilic microbial communities present in Indian red mud for their potential to neutralize the residue and extracting metals. These communities thrive in the highly alkaline, sodic, and metal-rich conditions of this challenging environment. The research specifically highlights alkali-halophilic species and their ability to withstand pH fluctuations (7–11) and varying NaCl levels (0–3 M). Out of the 13 isolates analyzed, all preferred a pH range of 9–10 and tolerated NaCl up to 1.5–2 M. Notably, Evansella cellulosilytica and Halalkalibacterium halodurans, showed superior tolerance index for Al3+ and Cr6+ at 2000 ppm, as well as Co2+ at 1000 ppm, followed by Sutcliffiella cohnii. However, the tolerance index for Cu2+, Te4+, and Hg2+ was relatively low for all tested strains. Additionally, Alkalihalobacillus sp. demonstrated remarkable tolerance to 10% red mud, facilitated by the production of mixed acids, neutralizing the pH within 24 h. The study proposes a potential mechanism for metal and red mud tolerance through genomic analysis using Rapid Annotation Subsystem Technology (RAST), revealing stress tolerance mechanisms, metal resistance genes, ion transporters, hydrolytic enzymes, siderophore production, and organic acid synthesis. Indigenous species like E. cellulosilytica, H. halodurans, S. cohnii, and Alkalihalobacillus sp. emerge as promising candidates for red mud bioremediation, providing insights into sustainable strategies for red mud disposal.