Gradual rise in arsenic (As) pollution due to reuse of unprocessed industrial wastewater for cultivation of crops is causing lethal effects on human health. Moreover, consumption of As-contaminated grains as a food is a global concern. Hence, effective alternatives to manage this problem are urgently needed. This research studied the combined role of iron-biochar nanocomposites ( Fe-BCNC) and plant growth promoting (PGPR) Bacillus sp. in arsenite [As (III)] detoxification in soil. The investigation focused on the growth of barley, Hordeum vulgare (H. vulgare), in an As (III)-contaminated soil and assesses As-associated health risks. Specifically, the study highlighted the impact of various treatment combinations of Fe-BCNC and PGPR with respect to As fractions in soil, As translocation, bioaccumulation, grain quality attributes, stress markers (like antioxidant enzymes) and health risks associated with As (III)-contaminated food intake. The Fe-BCNC was added into the soil at the rate of 80 g kg−1 of soil before sowing. The results revealed that As applied at 25 and 50 mg kg−1 enhanced phytotoxicity, causing reduced growth, and worsening physiological and biochemical attributes of H. vulgare. Fe-BCNC and PGPR promoted reductions in As toxicity in both soils (25 and 50 mg kg−1 As) by improving plant height (26, 52%), grain weight (75, 76%), physiological such as electrolyte leakage (37, 46%) and grain quality attributes such as crude protein (49, 59%) further regulated by antioxidant enzymes (CAT 31, 26; SOD 31, 25%; POD 48, 30%) under stress conditions. The combined treatment of Fe-BCNC with PGPR enhanced As immobilization in soil (40, 47%), respectively, with the highest proportion of iron, aluminum and manganese associated to As. Moreover, the same combination resulted in reduced As accumulation and translocation, lowering health risk (92, 94%) and cancer index (2 × 10–4, 2 × 10–3) in both soils, respectively. Formulations of Fe-BCNC and PGPR and their combination as biodynamic amendment could be crucial to alleviate As-related issues and prevent health risks in end consumers. This research helps achieving Sustainable Development Goals 2 (zero hunger) and 15 (life on land) by ameliorating food production, remediating tinted soil, and reconstituting the environment.