Green approaches for nanoparticle synthesis have emerged as biocompatible, economical, and environment-friendly alternatives to counteract the menace of microbial drug resistance. Recently, the utilization of honey as a green source to synthesize Fe2O3-NPs has been introduced, but its antibacterial activity against one of the opportunistic MDR pathogens, Klebsiella pneumoniae, has not been explored. Therefore, this study employed Apis mellifera honey as a reducing and capping agent for the synthesis of iron oxide nanoparticles (Fe2O3-NPs). Subsequent to the characterization of nanoparticles, their antibacterial, antioxidant, and anti-inflammatory properties were appraised. In UV-Vis spectroscopic analysis, the absorption band ascribed to the SPR peak was observed at 350 nm. XRD analysis confirmed the crystalline nature of Fe2O3-NPs, and the crystal size was deduced to be 36.2 nm. Elemental analysis by EDX validated the presence of iron coupled with oxygen in the nanoparticle composition. In ICP-MS, the highest concentration was of iron (87.15 ppm), followed by sodium (1.49 ppm) and other trace elements (<1 ppm). VSM analysis revealed weak magnetic properties of Fe2O3-NPs. Morphological properties of Fe2O3-NPs revealed by SEM demonstrated that their average size range was 100–150 nm with a non-uniform spherical shape. The antibacterial activity of Fe2O3-NPs was ascertained against 30 clinical isolates of Klebsiella pneumoniae, with the largest inhibition zone recorded being 10 mm. The MIC value for Fe2O3-NPs was 30 µg/mL. However, when mingled with three selected antibiotics, Fe2O3-NPs did not affect any antibacterial activity. Momentous antioxidant (IC50 = 22 µg/mL) and anti-inflammatory (IC50 = 70 µg/mL) activities of Fe2O3-NPs were discerned in comparison with the standard at various concentrations. Consequently, honey-mediated Fe2O3-NP synthesis may serve as a substitute for orthodox antimicrobial drugs and may be explored for prospective biomedical applications.