Capacitive deionization (CDI) is one of the most efficient and emerging techniques for the removal of toxic metal ions from aqueous solutions. In this study, mesoporous peanut shell derived activated carbon (PSAC) was prepared by low temperature pyrolysis at 500 °C. Subsequently, a novel iron oxide/PSAC (FeO/PSAC) nanocomposite adsorbent was prepared via facile one-pot hydrothermal synthesis method at 180 °C. Nucleation growth mechanism and appropriate characterizations of prepared nanocomposites were investigated. The obtained FeO/PSAC possessed a highly mesoporous structure, and a large specific surface area (680 m/g). The electrochemical analysis showed that the obtained FeO/PSAC nanocomposites exhibited higher capacitance (610 F/g at 10 mV/s), good stability and low internal resistance. A batch mode adsorption and CDI based Cr(VI) removal studies were conducted. Effects of solution pH and cycle time on Cr(VI) electrosorption capacity were further investigated. The FeO/PSAC based electrodes exhibit a maximum electrosorption capacity of 24.5 mg/g at 1.2 V, which was remarkably larger than other reported materials. The fabricated composite displayed higher electrosorption capacity with rapid time and a favorable reduction of Cr (VI) to Cr(III). Studies indicated that the FeO/PSAC based CDI electrode possesses a good potential to be applied for the removal of toxic metal ions from wastewater.