Activate carbon (AC) demand has increased worldwide, with application in adsorption, heterogeneous catalysis, and most recently as electrocatalyst support. However, while AC production from agro-industrial waste are widely researched, textile waste is neglected as raw material. In this study, cotton fabric was first applied as textile dye adsorbent after iron impregnation, which enhanced the adsorption capacity. The dye adsorbed fabric was than sequentially pyrolyzed at 800 degrees C for 2 h under N-2 atmosphere, producing a magnetic mesoporous activated carbon (MAC) of 472 m(2) g(-1) BET surface area with 82% micropores and magnetization saturation of 34.2 emu g(-1) deriving from encapsulated metallic alpha Fe. This new simple and fast one-step carbonization, activation and iron incorporation method, has very low chemicals consumption and waste generation compared to the traditionally applied ones. The so produced MAC was loaded with 20 % Pd and tested for electrocatalyst properties: high density current for ethanol oxidation of 549 mA mg(-1) Pd, 1.37 times higher than using commercial Pd catalyst, lower onset potential of -0.48 V vs NHE. Application of the electrocatalyst for direct ethanol fuel cell achieved a high energy production of 27 mW cm(-2) at 353 K.