This experimental work focused on the synthesis, characterization, and testing of a unique, magnetically separable, and eco-friendly adsorbent composite material for the advanced treatment and efficient removal of nitrate and phosphate pollutants from wastewater. The MgAl-augmented double-layered hydroxide (Mg-Fe/LDH) intercalated with sludge-based activated carbon (SBAC-MgFe) composites were characterized by FT-IR, XRD, BET, VSM, SEM, and TEM techniques, revealing homogeneous and efficient dispersion of MgFe/LDH within the activated carbon (AC) matrix, a highly mesoporous structure, and superparamagnetic characteristics. The initial solution pH, adsorbent dose, contact time, and temperature parameters were optimized in order to reach the best removal performance for both pollutants. The maximum adsorption capacities of phosphate and nitrate were found to be 110 and 54.5 mg/g, respectively. The competition between phosphate and coexisting ions (Cl−, CO32−, and SO42−) was studied and found to be remarkably lower in comparison with the nitrate adsorption. The adsorption mechanisms were elucidated by kinetic, isotherm, thermodynamic modeling, and post-adsorption characterizations of the composite. Modeling and mechanistic studies demonstrated that physisorption processes such as electrostatic attraction and ion exchange mainly governed the nitrate and phosphate adsorption. The composite indicated an outstanding regeneration performance even after five sequences of adsorption/desorption cycles. The fabricated composite with magnetically separable characteristics can be used as a promising adsorbent for the removal of phosphate and nitrate pollutants from wastewater.