Magnetic nanocrystalline cellulose (MNCC), a novel bio-based nanocomposite, was prepared via a simple co-precipitation-cross-linking technique and structurally characterized. Papain (PA) was successfully immobilized onto the MNCC. The resulting nano-biocatalyst PA@MNCC showed high PA loading (333 mg/g) and enzyme activity recovery (more than 80%). The stabilities of PA@MNCC was greatly superior to that of its free counterpart. Also, PA@MNCC manifested markedly enhanced solvent tolerance. The secondary structure study of the enzyme proved that these enhancements were attributed to the increase of structure rigidity of PA@MNCC. The observed optimum pH and temperature of PA@MNCC were significantly higher than the corresponding levels of free PA. A kinetic study demonstrated that PA@MNCC had a increase in enzyme-substrate affinity.Furthermore, the as-prepared PA@MNCC was successfully used as an efficient biocatalyst for the synthesis of N-(benzyloxycarbonyl)-alanyl-glutamine (Z-Ala-Gln) dipeptide in deep eutectic solvent (DES), choline chloride (ChCl):Urea(1:2), with a high yield (about 71.5%), which, to our knowledge, was greatly higher than that reported previously. Besides, the novel PA@MNCC was easily recycled from the reaction medium by magnetic forces. Obviously, MNCC is a promising and competitive enzyme carrier and the as-prepared nano-biocatalyst PA@MNCC exhibited great potential for efficient biosynthesis of dipeptide.