This study investigates the use of chemically modified Musa paradisiaca (banana fruit) peels (BPD) as an adsorbent for nitrate removal, representing a food waste management application of this agricultural waste material. This innovative approach addresses waste management challenges while offering a cost-effective and sustainable solution for water treatment. The research evaluates the effectiveness of BPD in a batch system and optimizes the process using Response Surface Methodology (RSM). Detailed characterization of the adsorbent was performed using advanced techniques including scanning electron microscopy (SEM), energy dispersive X-ray spectroscopy (EDS), Point of Zero Charge (pHzpc), Brunauer–Emmett–Teller (BET) surface area analysis, and Fourier Transform-Infrared Spectroscopy (FTIR). Isotherm analysis revealed that the Langmuir model provided an excellent fit (R² = 0.994), with a maximum adsorption capacity of 47.619 mg/g for BPD. Kinetic studies indicated that the pseudo-second-order model was most appropriate (R² = 0.969). Thermodynamic analysis showed that nitrate removal is more favorable at lower temperatures, with an increase in free energy at 313 K and a negative enthalpy value (-28.873 kJ/mol). Optimization via RSM identified optimal conditions: initial nitrate concentration of 83.92 mg/L, pH 3.57, contact time of 38.37 minutes, and temperature of 42.29 ℃, achieving a desirability score of 1.0. Furthermore, Density Functional Theory (DFT) analysis elucidated the adsorption mechanism, highlighting the predominance of C-O interactions in the ligand exchange process, with an electrophilicity index (ω) of −1.331 eV. These findings suggest that lignocellulosic materials from food processing waste, Musa paradisiaca peels, hold significant promise for mitigating nitrate contamination in drinking water.