MTBE is an aliphatic matter successfully removed from contaminated water by an advanced oxidation process. Additionally, arsenic is a toxic metalloid that is detected in some water supplies, such as in Iran. Concerning the oxidation potential of arsenic in an aqueous solution, it is expected that its interference in the photocatalytic removal of organic matter includes MTBE. Nevertheless, there is a lack of observation of this effect. In this study, the effect of arsenic on the photocatalytic removal of MTBE using an Fe2O3/MgO catalyst under UV radiation was investigated. Using an experimental design, modeling, and optimizing operational parameters, such as the arsenic and MTBE concentrations, catalyst dosage, pH, and reaction time, were studied. The synthesized nanocatalyst had a uniform and spherical morphological structure and contained 33.06% Fe2O3 and 45.06% MgO. The results indicate that the best model is related to the quadratic (p-value < 0.0001, R2 = 0.97) and that the effect of the MTBE concentration is greater than the others. The highest removal efficiency was taken in an initial concentration of 37.5 mg/L MTBE, 1.58 mg/L Fe2O3/MgO, pH 5, and a reaction time of 21.41 min without any As. The removal efficiency was negatively correlated with the initial MTBE concentration and pH, but it was positively associated with the Fe2O3/MgO dosage and reaction time. Finally, the presence of arsenic decreased the removal efficiency remarkably (90.90% As = 0.25 μg/L and 61% As = 500 μg/L). Consequently, MTBE was removed by the photocatalytic process caused by Fe2O3/MgO, but the presence of arsenic was introduced as a limiting factor. Therefore, pretreatment for the removal of arsenic and more details of this interference effect are suggested.