The annual discharge (6–7 million tons per year) of Chinese medicine industry waste (CMIW) is large and harmful. CMIW with a high moisture content can be effectively treated by hydrothermal carbonization (HTC) technology. Compared with CMIW, the volume and number of pores of the prepared hydrochar increased significantly after alkali etching (AE), and they had abundant oxygen-containing functional groups. These properties provide physical and chemical adsorption sites, improving the adsorbent activity of the alkaline etching of Chinese medicine industry waste hydrochar (AE-CMIW hydrochar). However, few studies have investigated the adsorption of organic dyes and heavy metals in mixed solutions. This study proposed a method of coupling HTC with AE to treat CMIW and explored the potential of AE-CMIW hydrochar to remove metal ions and organic dyes from mixed solution. We analyzed the removal rates of metal ions and organic dyes by the adsorbents and investigated their differences. The results showed that the lead ion, cadmium ion, and methylene blue could be efficiently removed by AE-CMIW hydrochar in a mixed solution, with removal rates of more than 98%, 20–57%, and 60–80%, respectively. The removal rates were different mainly due to the various electrostatic interactions, physical adsorption, differences in the hydrating ion radius of the metal ions, and functional group interactions between the AE-CMIW hydrochar and the lead ion, cadmium ion, and methylene blue. This study provides a technical method for preparing multi-pollutant adsorbents from CMIW, which enables efficient utilization of organic solid waste and achieves the purpose of treating waste with waste.