A process for using reduced vat dyes in a continuous dyeing process for production of dyed yarns and fabrics of different colors. In the process, dye composition is introduced to a treatment unit for reduction to desired dye composition. The dye concentration in the treatment unit is lower than feeding dye concentration so that dye precipitation does not occur, but significantly higher than the circulating dye concentration so that the dye is reduced efficiently. Although the preferred location for the treatment unit is before the circulation line, it may be at any location before the dip-dye tank.