A novel magnetic fluid adsorbent (magnetic chitosan "fluid", MCF) was prepared via a one-step in situ co-precipitation procedure using inexpensive and environmentally friendly chitosan (CS) and iron precursor. The resultant ultrafine colloid was characterized using transmission electron microscopy (TEM), X-ray powder diffraction (XRD), thermogravimetric analysis (TGA), and Fourier transform infrared spectroscopy (FTIR). The sorption and desorption characteristics of the composite were studied using a common Congo Red (CR) anionic dye to evaluate the suitability of the MCF for anionic dye wastewater purification. As an important advantage, the dye adsorption could be achieved in a wide alkaline pH range and reached the equilibrium within 5 min demonstrating the superior properties of our material compared the previously reported CS-based adsorbents. The adsorption obeyed the Langmuir isotherm model with the remarkable maximum adsorption capacity of approx. 1700 mg/g for CR under neutral pH. NaOH treatment was utilized to desorb and regenerate MCF, while the removal rate still remained above 90% after recycling five times, demonstrating that the MCF could be employed for repeated use without significant capacity loss. MCF could be readily separated from water within 30 s under a low magnetic field (<0.035 T). Overall, the ultrafine colloidal state of the synthesized MCF enabled a rapid pollutant uptake, high adsorption capacity, and reusability. The above characteristics of MCF and its environmentally friendly composition make it a very promising material for practical dyeing wastewater purification.