Finding a cost-effective adsorbent can be an obstacle to large-scale applications of adsorption. This study used an efficient activated carbon adsorbent based on agro-waste for dye removal. Pistachio shells as abundant local agro-wastes were used to prepare activated carbon. Then, it was modified with iron to improve its characteristics. Acid red 14 was used as a model dye in various conditions of adsorption (AR14 concentration 20–150 mg L−1, pH 3–10, adsorbent dosage 0.1–0.3 g L−1, and contact time 5–60 min). A mesoporous adsorbent was prepared from pistachio shells with 811.57 m2 g−1 surface area and 0.654 cm3 g−1 pore volume. Iron modification enhanced the characteristics of activated carbon (surface area by 33.3% and pore volume by 64.1%). Adsorption experiments showed the high effectiveness of iron-modified activated carbon for AR14 removal (>99%, >516 mg g−1). The adsorption followed the pseudo-second kinetic model (k = 0.0005 g mg−1 min−1) and the Freundlich isotherm model (Kf = 152.87, n = 4.61). Besides, the reaction occurred spontaneously (ΔG0 = −36.65 to −41.12 kJ mol−1) and was exothermic (ΔH0 = −41.86 kJ mol−1 and ΔS0 = −3.34 J mol−1 K−1). Iron-modified activated carbon derived from pistachio shells could be cost-effective for the treatment of industrial wastewater containing dyes.