In this work, Mg(OH)2 functionalized cellulose waste (CW@Mg(OH)2) composite was prepared. The CW@Mg(OH)2 composite was utilized for the adsorption of Cu(II) and Fe(II) ions from water and waste sludge streams. The characterization results indicated the successful formation of Mg(OH)2 onto cellulose waste surface with high crystallinity and abundant surface functionalities (OH, C-O, and C-OH) which enhanced the removal % of heavy metals. At optimized adsorption conditions, the maximum monolayer adsorption capacity of CW@Mg(OH)2 composite was 488 mg/g for Cu(II) and 510 mg/g Fe(II)) at metal concentrations 400 mg/L with solution pH of ≥ 5.2 for both metal ions by 300 min. at 25 °C of system temperature. The experimental data was fitted to the recognized nonlinear isotherm and kinetic models. Energetically, the removal of Cu(II) and Fe(II) ions using CW@Mg(OH)2 composite was impulsive and endothermic in nature. The adsorption mechanism of heavy metals onto CW@Mg(OH)2 composite is mainly associated with the surface adsorption, chemical, and hydrogen bonding due to surface functionalities as confirmed by FTIR. The CW@Mg(OH)2 composite was investigated for the recovery of metal ions from microwave-digested sewage sludge and showed a removal % of (21 and 16 %) for iron and copper , respectively. The prepared CW@Mg(OH)2 composite find a cost-effective, stable promising and effective for decontamination of heavy metals from wastewater.