There are several green methods available to synthesize iron-based nanoparticles using different bio-based reducing agents. Although their useful properties in degradation of organic dyes, chlorinated organics, or arsenic have been described earlier, their characterization has been ambiguous, and further research is needed in this area. Synthesis and characterization details on iron-based nanoparticles produced by green tea extract are described in detail; characterization was carried out by transmission electron microscopy (TEM), X-ray powder diffraction (XRD), and UV–vis spectrometry followed by ecotoxicological assay. XRD and TEM analyses revealed that iron forms amorphous nanosized particles with size depending on reaction time. Moreover, low-temperature Mössbauer spectroscopy confirmed progressive reduction of Fe3+ to Fe2+ during the reaction. Finally, the iron(II,III) nanoparticles prepared by green tea extract (GT–Fe nanoparticles) were found to have negative ecotoxicological impacts on important aquatic organisms such as cyanobacterium (Synechococcus nidulans), alga (Pseudokirchneriella subcapitata), and even invertebrate organisms (Daphnia magna). The EC50 values are 6.1 ± 0.5 (72 h), 7.4 ± 1.6 (72 h), and 21.9 ± 4.3 (24 h) mg of Fe per L, respectively.