Spirulina algae is an excellent candidate for catalyst preparation due to its reactive functional groups, cost-effectiveness, widespread commercial accessibility, and biodegradability. In this study, magnetized Spirulina was used for the synthesis of dihydroquinazolin-4(1H)-ones (DHQZs) as catalyst. Magnetized Spirulina was produced by CoFe2O4 and sulfonation method using chlorosulfonic acid to create the catalyst [CoFe2O4-Sp-SO3H]. It was affirmed by various techniques, including Fourier transform infrared (FT-IR), Vibrating sample magnetometry (VSM), Powder X-ray diffraction (XRD), Energy-dispersive X-ray spectroscopy (EDS), Thermogravimetric analysis (TGA), Transmission electron microscopy (TEM), Field emission scanning electron microscopy (FE-SEM), and elemental mapping techniques. DHQZs synthesis was accomplished through a concise one-pot, three-component reaction involving a range of diverse aldehydes, isatoic anhydride, and primary aromatic amine, within an aqueous medium. The method offers several advantages, including using green conditions, the generation of several new 2-furan-quinazolinone derivatives, chromatography-free purification, short reaction times, appropriate yield of product (75–96%), and catalyst recyclability. The proposed catalyst and water as solvent demonstrated a strong synergistic effect, leading to the prosperous synthesis of various novel dihydroquinazolinones at 60 °C. These numerous benefits make our approach highly attractive for academic research and industrial applications.