In this work, synthesis of activated carbon-Fe3O4 composites using activated carbon and iron benzoate/oxalate precursors by simple pyrolytic method and its utility for the removal of acid yellow dye from water are presented. Iron carboxylates held up into the pores of carbon dissociate at their decomposition temperatures form dispersed Fe3O4 nanoparticles in carbon matrix. The composites were characterized by FTIR, PXRD, SEM, TEM, EDX and magnetization measurements. The size of the nano iron oxides are in the range of 21-33 nm formed from iron benzoate precursor and 6-11 nm from iron oxalate precursor. The oxides are magnetic and their saturation magnetization in the range of 0.08-0.16 emu/g and Coercivity (H(c)) 474-600, being lower and higher than that of bare bulk Fe3O4 are due to the nano size of oxides. Composites find application in the removal of acid yellow dye 17 from the synthetic aqueous solution at pH 5. The adsorption data are found to fit well for Langmuir adsorption isotherm. Kinetics data of adsorption of dyes indicate that the adsorption follows pseudo-second order kinetic model.