The granulation of bismuth oxide (BO) by alginate (Alg) and the iodide adsorption efficacy of Alg–BO for different initial iodide concentrations and contact time values were examined. The optimal conditions for Alg–BO granulation were identified by controlling the weight ratio between Alg and BO. According to the batch iodide adsorption experiment, the Alg:BO weight ratio of 1:20 was appropriate, as it yielded a uniform spherical shape. According to iodide adsorption isotherm experiments and isotherm model fitting, the maximum sorption capacity (qm) was calculated to be 111.8 mg/g based on the Langmuir isotherm, and this value did not plateau even at an initial iodide concentration of 1000 mg/L. Furthermore, iodide adsorption by Alg–BO occurred as monolayer adsorption by the chemical interaction and precipitation between bismuth and iodide, followed by physical multilayer adsorption at a very high concentration of iodide in solution. The iodide adsorption over time was fitted using the intraparticle diffusion model. The results indicated that iodide adsorption was proceeded by boundary layer diffusion during 480 min and reached the plateau from 1440 min to 5760 min by intraparticle diffusion. According to the images obtained using cross-section scanning electron microscopy assisted by energy-dispersive spectroscopy, the adsorbed iodide interacted with the BO in Alg–BO through Bi–O–I complexation. This research shows that Alg–BO is a promising iodide adsorbent owing to its high adsorption capacity, stability, convenience, and ability to prevent secondary pollution.