A terpolymer gel, Gellan gum-graft-poly(2-acrylamido-2-methyl-1-propanesulfonic acid-co-dimethylaminopropyl methacrylamide) and its composite with the clay, Montmorillonite, was prepared by free-radical polymerization and crosslinking reactions in solution. The terpolymer gel and the clay composite were characterized using FTIR, TGA, SEM, and X-ray diffraction techniques. Swelling studies were carried out in different pH and salt solutions. The gel showed maximum swelling capacity in alkaline medium, while the composite showed higher swelling in neutral medium. The swelling of the gel and the composite followed second kinetics model and water transport is found to be a less Fickian diffusion process. The terpolymer gel and the composite were evaluated for the adsorption of rhodamine B (RhB) and chromotrope 2R (C2R) dyes. Rhodamine B is found to be adsorbed to a higher extent than chromotrope 2R and the adsorption isotherm studies suggested that adsorption of both RhB and C2R on the terpolymer gel was best explained by Langmuir model, while the adsorption on the Composite fitted best into Freundlich model. Similarly, the adsorption kinetics data for both RhB and C2R dyes followed the second-order kinetics.