A new dual‐functional Cu(II) complex and its nanohybrid form encapsulated into NaY zeolite cavities were synthesized. The synthesized compounds were characterized using elemental analyses, X‐ray fluorescence, infrared, 1H NMR, electronic, electron spin resonance and mass spectra, powder X‐ray diffraction, surface area and transmission electron microscopy in addition to conductivity and magnetic susceptibility measurements. The encapsulated Cu(II) complex was catalytically tested for degradation of industrial wastewater. The decolorization and mineralization results indicate that the Cu(II) complex encapsulated into zeolite host is an effective heterogeneous catalyst for real industrial wastewater remediation. In addition, both free and encapsulated Cu(II) complexes were tested as anti‐microbial and anti‐tumour agents. The results show that the Cu(II) complex encapsulated into zeolite has a high activity (IC50 = 14.4 μg ml−1). The results of in vivo toxicity experiments indicate that the Cu(II) complex encapsulated into zeolite is a less toxic biocompatible material (LD50 = 1245 mg kg−1). The catalytic properties, cytotoxicity and toxicity of the new nanohybrid Cu(II) complex encapsulated into zeolite make it a promising eco‐friendly and biocompatible material for water remediation and biomedical applications.