Iron oxide nanoparticles (FeONPs) are a fascinating field of study due to their wide range of practical applications in environmental and medical contexts. This study presents a straightforward, environmentally friendly method for producing FeONPs utilizing β-cyclodextrin (β-CD) as a reducing and capping agent. This approach results in the rapid and effective eco-friendly synthesis of β-CD/FeONPs. The properties and characteristics of β-CD/FeONPs were investigated using various methods, including ultraviolet-visible (UV/vis) spectroscopy, Fourier transform infrared (FTIR) spectroscopy, scanning electron microscopy (SEM), transmission electron microscopy (TEM), X-ray diffraction (XRD), thermogravimetry analysis (TGA), and vibrating-sample magnetometry (VSM). The absorption of β-CD/FeONPs caused a distinct peak at 349 nm, as evidenced by the results of UV/vis studies. This peak was attributed to the absorption of surface plasmon resonance. The crystalline nature of β-CD/FeONPs was confirmed through XRD analysis. The SEM and TEM analyses have verified the geometry and structural characteristics of β-CD/FeONPs. The β-CD/FeONPs exhibited remarkable effectiveness in the decomposing efficiency (%) of methylene blue (MB) dye with 52.2, 94.1, and 100% for 0.2, 0.4, and 0.6 g β-CD/FeONPs, respectively. In addition, the highest efficiency in hunting radicals was observed (347.2 ± 8.2 mg/g) at 100 mg/mL β-CD/FeONPs; the combination of β-CD/FeONPs exhibited remarkable effectiveness in inhibiting the growth of some bacteria that cause infections. The capabilities of β-CD/FeONPs for various applications showed that these materials could be used in photocatalytic, antioxidants, and antibacterial. Additionally, the eco-friendly synthesis of these materials makes them a promising option for the remediation of harmful pollutants and microbes.