Abstract: Retting is a process of immersion of coconut husks in water for manufacture of good quality coir fiber. Open retting of coconut husks in water bodies is the conventional method which causes serious environmental problems due to emission of green house gases. The pollution due to open retting practice accounts to biodegradable COD and large quantities of non-biodegradable poly phenols in the retting water bodies. This has been affecting natural heritage of rich biodiversity in the backwater bodies. Mechanical and chemical methods for extraction of fiber are found not to be feasible solutions because of low quality and economics. Closed retting, an alternative to open retting is a process in which soaking liquor is treated in a high rate anaerobic reactor. In this retting method biodegradable organics are converted to VFA fractions like acetic, propionic and butyric acids and finally to CH4. There is no sulphide generation in this process as fresh water can be used for producing quality fibers. The present study analyses the performance of an anaerobic baffled reactor (ABR) in the treatment of husk soaking liquor. A laboratory scale Anaerobic Baffled Reactor and retting tank was fabricated and the efficiency of the system was evaluated by analyzing the parameters like, Alkalinity, pH, COD and total Suspended Solids etc. The analysis indicated favourable atmosphere for anaerobic reaction within the reactor and he working performance of anaerobic baffled reactor in the treatment of husk liquor is found to be satisfactory.