In the present work, nanocomposite of bentonite clay with MgFe$_2$O$_4$ nanoparticles (NPs) was synthesized by sol–gel route. It was studied for the sequestration of Pb(II) and Ni(II) ions from the aqueous solution. The nanocomposite was analysed using X-ray diffraction, vibrating sample magnetometry, scanning electron microscopy equipped with energydispersiveX-ray spectroscopy, Fourier transform infrared spectroscopy, transmission electron microscopy and Brunauer–Emmett–Teller (BET) as analytical tools. The lower value of saturation magnetization (Ms) of nanocomposite (5.70 emu g$^{−1}$) as compared with pristine MgFe$_2$O$_4$ NPs (12.32 emu g$^{−1}$) is due to the presence of non-magnetic bentonite clay. BET studies further revealed higher surface area for nanocomposite (75.43 m$^2$ g$^{−1}$) than MgFe$_2$O$_4$ NPs (62.51 m$^2$ g$^{−1}$). The presence of bentonite clay during sol–gel synthesis of MgFe$_2$O$_4$ NPs prevented particle growth. The adsorption data were modelled using Temkin, Freundlich, Dubinin–Radushkevitch and Langmuir adsorption isotherms. Comparative evaluation of adsorptionpotential of nanocomposite for Pb(II) and Ni(II) ions confirmed higher affinity of Pb(II) ions ($q_{\rm max} = 90.90$ mg g$^{−1}$) towards the nanocomposite as compared with Ni(II) ions ($q_{\rm max} = 76.92$ mg g$^{−1}$). The results were explained on the basis of their hydration enthalpy. Thermodynamic analysis confirmed endothermic and spontaneous nature of adsorption processwith $\Delta H^o$ values of 48.67 and 21.54 kJ mol$^{−1}$ for Pb(II) and Ni(II) ions, respectively. Kinetic studies confirmed that a pseudo-second-order kinetic model was followed. The obtained results suggested that adsorption capacity of nanofabricated composite for Pb(II) and Ni(II) ions was higher than that of pristine MgFe$_2$O$_4$ NPs and bentonite clay. The saturated adsorbentwas magnetically retrievable and easily regenerated with 0.1 MHCl solutions. It can serve as a potential composite adsorbent for the remediation of heavy metal ions.