Water contamination from industrial dyes poses a significant threat to the environment and human health. This study focuses on the development of advanced porous cross-linked chitosan-based hydrogels and superparamagnetic hydrogel nanocomposites for efficient removal of indigo carmine (IC) dye from water. The hydrogels were cross-linked using benzophenonetetracarboxylic dianhydride (BTDA) and incorporated functionalized magnetic iron nanoparticles (CP-MNPs). A comparative study revealed that the superparamagnetic hydrogel nanocomposite exhibited superior performance in IC dye adsorption. Higher IC removal efficiencies were observed at lower amounts of cross-linker, pH, and adsorbent dosage. The superparamagnetic hydrogel nanocomposite demonstrated superior IC dye adsorption compared with the chitosan hydrogel. The adsorption process followed a pseudo-second-order kinetic model and Langmuir isotherm model. Thermodynamic data indicated that the adsorption onto the superparamagnetic hydrogel nanocomposite was endothermic and spontaneous, making it a promising material for environmental applications.