In the present investigation, it is attempted to carry out the synthesis and surface modification of iron oxide magnetic nanoparticle in a single step using the iron precursors and biomolecules present in culture supernatant produced by S.thermolineatus utilizing the fish processing waste as a substrate. The biomolecules in the culture supernatant acts as the stabilizing and capping agent so that the desired functionality is achieved on the iron oxide magnetic nanoparticle surface. The synthesized iron oxide magnetic nanoparticles were characterised by UV Visible spectroscopy, Fourier Transform-Infrared spectroscopy, Scanning electron microscopy, Transmission electron microscopy, X-ray diffraction analysis, Thermogravimetric analysis, Vibrating sample magnetometer and dynamic light scattering. The synthesized iron oxide magnetic nanoparticle was employed for the removal of copper from pigment industry effluent. Response surface methodology was used to optimize the conditions for the maximum removal of copper ions. The synthesised iron oxide magnetic nanoparticle with surface modification was found to be efficient in removing the copper by 85% from the pigment industry effluent. Desorption studies revealed that the iron oxide magnetic nanoparticle can be reused for four cycles.