We report a novel multi-functional magnesium oxide (MgO) immobilized chitosan (CS) composite was prepared by chemical precipitation method. The CS-MgO composite was characterized by Fourier transform infrared spectroscopy, X-ray diffraction, transmission electron microscopy and zeta potential. The composite was applied as a novel adsorbent for removal of methyl orange model dye and the effect of adsorbent dosage, pH and contact time were studied. The adsorption kinetics followed a pseudo second order reaction. The adsorbent efficiency was unaltered even after five cycles of reuse. In addition, the composite exhibited a superior antibacterial efficacy of 93% within 24 h against Escherichia coli as measured by colony forming units. Based on the data of present investigation the composite being a biocompatible, eco-friendly and low-cost adsorbent with antibacterial activity could find potential applications in variety of fields and in particular environmental applications. (C) 2013 Elsevier B.V. All rights reserved.