Here, we report the fabrication of nZVI by the wet chemical technique in the presence of ethanol using ferric iron and sodium borohydride as the reducing agents under ambient conditions. The obtained nZVI particles are mainly in a zero-valent oxidation state and do not undergo significant oxidation for several weeks. The structural and morphological parameters of nZVI were investigated by using UV, XRD, SEM, EDX, TEM, and DLS analysis. The optical nature, bandgap energy, and absorption edge were all revealed by the UV–visible spectrum. The phase development and crystallinity of nZVI particles were shown by the XRD pattern. The morphological investigation revealed that the nanoparticles were spherical with an average size of 34–110 nm by using ImageJ software, and the elemental analysis was analyzed using EDX. Furthermore, the catalytic treatment performance of domestic wastewater was evaluated in terms of pH, COD (chemical oxygen demand) solubilization, total solids (TS), volatile solids (VS), phosphorous, and total nitrogen (TN) reduction under aerobic and anaerobic operating conditions. The effluent was subjected to a process evaluation with a different range (100–500 mg/L) of nZVI dosages. The COD solubilization and suspended solids reduction were significantly improved in the anaerobic condition in comparison to the aerobic condition. Furthermore, the effect of nZVI on phosphorous (PO43−) reduction was enhanced by the electrons of iron ions. The high concentration of nZVI dosing has a positive impact on COD solubilization and phosphorous removal regardless of the aeration condition with 400 mg/L of nZVI dosage.