Azo dyes laden wastewater is discharged into waterbodies from various industries such as textile, leather, food, cosmetics, printing, etc., without any proper treatments. Therefore, simple, cost-effective, environment-friendly and efficient methods to treat dye-containing wastewater are essential to avoid their toxic effects on the environment and human health. The main objective of this study is to synthesize spherical chitosan hydrogel particles and their utilization for the removal of azo dye namely methylene blue from wastewater. Recently, chitosan as a bio-based adsorbent has gained attention due to its unique characteristics of biodegradability, sorption capacity, stability and easy availability. In this study, chitosan hydrogel particles were synthesized through precipitation method using alkaline medium and then oven dried. The effect of adsorbent dosage, initial dye concentration and contact time on dye removal efficiency were studied. The final dried chitosan hydrogel particles (CHPs) were in spherical shape with the size ranges between 1.60–1.80 mm. Furthermore, the structure and morphology of prepared CHPs were analyzed using Fourier Transform Infrared spectroscopy (FTIR) and Scanning Electron Microscopy (SEM) analysis and dye removal efficiency was evaluated using UV–Visible spectroscopy. The adsorption isotherm and kinetics of adsorption data fitted well to the Freundlich isotherm model and pseudo second order kinetic model (with R2 > 0.98). Result analysis revealed that good methylene blue dye removal efficiency (greater than 80%) was achieved using chitosan hydrogel particles as a biosorbent. The present findings demonstrate that chitosan-based hydrogel particles can be utilized as an effective biosorbent for the removal of azo dyes from industrial wastewater.