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Magnesium oxide nanoparticles (MgO-NPs) were synthesized using the fungal strain Aspergillus terreus S1 to overcome the disadvantages of chemical and physical methods. The factors affecting the biosynthesis process were optimized as follows: concentration of Mg(NO3)2·6H2O precursor (3 mM), contact time (36 min), pH (8), and incubation temperature (35 °C). The characterization of biosynthesized MgO-NPs was accomplished using UV-vis spectroscopy, Fourier transform infrared (FT-IR) spectroscopy, transmission electron microscopy (TEM), scanning electron microscopy—energy dispersive X-ray (SEM-EDX), X-ray diffraction (XRD), and dynamic light scattering (DLS). Data confirmed the successful formation of crystallographic, spherical, well-dispersed MgO-NPs with a size range of 8.0–38.0 nm at a maximum surface plasmon resonance of 280 nm. The biological activities of biosynthesized MgO-NPs including antimicrobial activity, biotreatment of tanning effluent, and chromium ion removal were investigated. The highest growth inhibition of pathogenic Staphylococcus aureus, Bacillus subtilis, Pseudomonas aeruginosa, Escherichia coli, and Candida albicans was achieved at 200 μg mL–1 of MgO-NPs. The biosynthesized MgO-NPs exhibited high efficacy to decolorize the tanning effluent (96.8 ± 1.7% after 150 min at 1.0 µg mL–1) and greatly decrease chemical parameters including total suspended solids (TSS), total dissolved solids (TDS), biological oxygen demand (BOD), chemical oxygen demand (COD), and conductivity with percentages of 98.04, 98.3, 89.1, 97.2, and 97.7%, respectively. Further, the biosynthesized MgO-NPs showed a strong potential to remove chromium ions from the tanning effluent, from 835.3 mg L–1 to 21.0 mg L–1, with a removal percentage of 97.5%. [ABSTRACT FROM AUTHOR]