Magnetic Fe3O4, Fe and Fe/Pd nanoparticles embedded within the pores of activated carbon fabrics (ACF) were prepared by impregnation of the ACF in iron acetylacetanoate (Fe(acac)3) ethanol solution, followed by thermal decomposition of the embedded iron precursor at 200, 400 and 600 °C in an inert atmosphere. The effect of the annealing temperature on the chemical composition, shape, crystallinity, surface area, pore volume, and magnetic properties of the various functionalized ACF was elucidated. The Fe nanoparticles within the ACF were also doped with tinier Pd nanoparticles, by impregnation of the Fe/ACF in palladium acetate ethanol solution. The potential use of the functionalized ACF for removal of a model azo-dye, orange II, was demonstrated. This study illustrated the enhanced removal of the dye from an aqueous solution according to the following order: Fe/Pd/ACF > Fe/ACF > ACF. In addition, the enhanced activity of Fe3O4/ACF in the presence of increasing concentrations of H2O2 (Fenton catalysts) was also illustrated.