The removal efficiency of heavy metal ions (cadmium(II), Cd(II); cobalt(II), Co(II); nickel(II), Ni(II); copper(II), Cu(II)) by potassium ferrate(VI) (K2FeO4, Fe(VI)) was studied as a function of added amount of Fe(VI) (or Fe) and varying pH. At pH = 6.6, the effective removal of Co(II), Ni(II), and Cu(II) from water was observed at a low Fe-to-heavy metal ion ratio (Fe/M(II) = 2:1) while a removal efficiency of 70% was seen for Cd(II) ions at a high Fe/Cd(II) weight ratio of 15:1. The role of ionic radius and metal valence state was explored by conducting similar removal experiments using Al(III) ions. The unique combination of X-ray diffraction (XRD), X-ray photoelectron spectroscopy (XPS), in-field Mössbauer spectroscopy, and magnetization measurements enabled the delineation of several distinct mechanisms for the Fe(VI)-prompted removal of metal ions. Under a Fe/M weight ratio of 5:1, Co(II), Ni(II), and Cu(II) were removed by the formation of MFe2O4 spinel phase and partially through their structural incorporation into octahedral positions of γ-Fe2O3 (maghemite) nanoparticles. In comparison, smaller sized Al(III) ions got incorporated easily into the tetrahedral positions of γ-Fe2O3 nanoparticles. In contrast, Cd(II) ions either did not form the spinel ferrite structure or were not incorporated into the lattic of iron(III) oxide phase due to the distinct electronic structure and ionic radius. Environmentally friendly removal of heavy metal ions at a much smaller dosage of Fe than those of commonly applied iron-containing coagulants and the formation of ferrimagnetic species preventing metal ions leaching back into the environment and allowing their magnetic separation are highlighted.