In light of the rapid advancement of the dyeing industry, the resultant environmental contamination from extensive dye utilization and the subsequent sludge generated by the treatment of dyeing wastewater has escalated, prompting broad apprehension. This study employed the response surface methodology to explore the iodine adsorption capacity of pyrolyzed dyeing sludge peat treated with ZnCl2 [ZnCl2 modified sludge biochar (ZSC)] as the adsorbent material for optimization of the parameters for ZSC preparation. The analysis of the variance of the response surface methods indicated that the pyrolysis temperature emerged as the most pivotal factor. The maximum adsorption capacity of malachite green (MG) by ZSC reached up to 224.0962 mg/g. Moreover, the adsorptive efficacy of ZSC on MG was evaluated under varying environmental conditions, showcasing that the optimal parameters facilitated a remarkable MG removal efficiency of 99.13%. Even after five cycles of reuse, ZSC maintained a substantial decolorization capability of 45% for MG. Characterization of ZSC through scanning electron microscopy (SEM), X-ray diffraction (XRD), Fourier transform infrared spectroscopy (FT-IR), and Brunauer–Emmett–Teller (BET) indicated a high specific surface area of 495.38 m2/g and the presence of reactive functional groups (–OH and C–O). The adsorption process, upon thermodynamic and kinetic evaluation, aligned more closely with the Langmuir isotherm model and the pseudo-second-order kinetic model. Mechanistic adsorption results revealed that electrostatic attraction, pore-filling, hydrogen bonding, and π-π stacking interactions collectively accounted for the elevated MG removal efficacy by the ZSC. This study represents a promising approach, transforming waste into a treatment solution with the dual purpose of dye removal and resource reclamation from dyeing sludge.