In this study we report application of a novel nano bio-composite material for treating water contaminated with textile dyes. The bacteria Klebsiella sp. already adapted to 50 mg/L of congo red, and nano zerovalent iron(synthesized using pomegranate peels extract) were immobilized in sodium alginate to prepare the nano-bio-composite beads (NB beads).The NB beads were successfully applied for congo red removal from the aqueous solutions in batch reactor, and the experimental factors like dye concentration, bead weight, pH, and interaction time were optimized. Using the optimized conditions (congo red concentration 50 mg/L; pH 5.0; NB beads weight 20% w/v; interaction time 180 min),97.53 ± 0.4%, and 126 ± 1.2 mg/g removal (%) and removal capacity was obtained. The reaction kinetics followed pseudo-first order model. Real life applications of the nano bio composite beads were established with congo red-spiked tap water, groundwater and lake water samples with 95.82 ± 0.3%, 95.88 ± 0.6% and 95.53 ± 0.4% removal respectively. After the treatment, the effluent solution showed significantly less toxicity towards environmental bacteria and algae than the untreated dye solutions. This proves that the novel nano-bio composite was successful in achieving dye removal with consequent detoxification. © 2019 Elsevier Ltd. All rights reserved.