This is the second paper of a series where we study the clustering of LRG galaxies in the latest spectroscopic SDSS data release , DR6 , which has 75000 LRG galaxies covering over 1 Gpc ^ { 3 } / h ^ { 3 } for 0.15 < z < 0.47 . Here we focus on modeling redshift space distortions in \xi ( \sigma, \pi ) , the 2-point correlation in separate line-of-sight and perpendicular directions , at small scales and in the line-of-sight . We show that a simple Kaiser model for the anisotropic 2-point correlation function in redshift space , convolved with a distribution of random peculiar velocities with an exponential form , can describe well the correlation of LRG at all scales . We show that to describe with accuracy the so called ” fingers-of-God ” ( FOG ) elongations in the radial direction , it is necessary to model the scale dependence of both bias b and the pairwise rms peculiar velocity \sigma _ { 12 } with the distance . We show how both quantities can be inferred from the \xi ( \sigma, \pi ) data . From r \simeq 10 Mpc/h to r \simeq 1 Mpc/h , both the bias and \sigma _ { 12 } are shown to increase by a factor of two : from b = 2 to b = 4 and from \sigma _ { 12 } = 400 to 800 Km/s . The later is in good agreement , within a 5 percent accuracy in the recovered velocities , with direct velocity measurements in dark matter simulations with \Omega _ { m } = 0.25 and \sigma _ { 8 } =0.85 .