The photocatalytic Fenton process, which produces a strong oxidant in the form of hydroxyl radicals, is a useful method to degrade organic contaminants in water. The Fenton reaction uses hydrogen peroxide and Fe2+ ions under relatively acidic conditions (typically pH 2–3) to maintain solubility of the iron catalyst but is troublesome due to the large volumes of decontaminated yet highly acidic water generated. Starch-stabilized iron (Fe2+/Fe3+) oxide nanoparticles were synthesized to serve as a colloidal catalyst system as the hydrophilic starch effectively prevents precipitation of the nanoparticles under conditions closer to neutrality. To evaluate the usefulness of this catalyst system for the photo-Fenton degradation of methylene blue as a model dye, the preparation protocol used and the iron loading in the starch were varied. The photocatalytic Fenton reaction was investigated at pH values up to 4. Not only were the starch-stabilized catalysts able to decolorize the dye but also to mineralize it in part, that is, to degrade it to carbon dioxide and water. The catalysts could be reused in several degradation cycles. This demonstrates that starch is an efficient stabilizer for iron oxide nanoparticles in aqueous media, enabling their use as environmentally friendly and cost-effective photo-Fenton catalysts. These starch-stabilized iron nanoparticles may also be useful to degrade other dyes and pollutants in water, such as pesticides.