The effect and mechanism of phenol removal by immobilized microorganisms in Fe3O4 nanomaterial-modified pharmaceutical residue biochar was investigated to develop efficient biochar immobilizing microbial technology. Plant residue biochar (Y3, Y5, and Y7) was prepared from Andrographis paniculata plant residues as the raw material at 300 °C, 500 °C, and 700 °C, respectively. Y7 was modified with Fe3O4 nanomaterial (Fe-Y7). These four kinds of biochars were used as carriers to adsorb immobilized Alcaligenes faecalis strain JH1, JY3, JY5, JY7, and Fe-Y7 to investigate the mechanism of phenol removal, and eight cycles were performed to analyze their immobilization performance. Compared with suspended bacteria, biochar-immobilized bacteria could improve their tolerance in different environments. At temperatures of 25 °C to 40 °C, pH = 5~9, initial phenol concentration of 300–500 mg/L, and salinity of 3%, the bacteria could still grow and maintain strong activity within 48 h. The water-extractable organic carbon of biochar was also tested for the degradation of phenol by bacteria, which was found to have different stimulating effects on bacteria. In the batch experiments, as the number of cycles increased, the bacteria grew and adhered rapidly to the biochar, eventually forming a thick and sticky biofilm. After the sixth cycle, all the biochar-immobilized bacteria could remove 300 mg/L phenol solution within 12 h. The removal rate of phenol by JFe-Y7 was relatively fast in the eighth cycle. The results indicated that biochar-immobilized bacteria have good durability, stability, and reproducibility and that Fe3O4 nanoparticle modification could improve the removal of phenol by increasing the phenol adsorption amount, the adsorption capacity of bacteria, and the enzymatic activity of bacteria.