Anthropogenic enrichment of phosphorus (P) in water environment can cause eutrophication, harmful algal blooms, and water quality deterioration. Adsorbents are often used for the removal and recovery of P from water, however, P is highly susceptible to re-release in anoxic benthic environments. As a response, this study prepared oxygen-carrying iron-rich biochar (O-Fe-BC) as an effective oxygen micro-nanobubble carrier (Q = 8.7024 cm³/g STP at 1.5 MPa) and P adsorbent (qm = 16.7097 mg P/g, q0.1 = 3.1974 mg P/g). Over the 90-day experimental period with O-Fe-BC, dissolved oxygen (DO) levels in the overlying water could maintain at ∼4 mg/L (peaking at ∼9.5 mg/L), and total phosphorus (TP) and soluble reactive phosphorus (SRP) levels decreased by over 96 %. The higher inorganic phosphorus content in the surface sediment-biochar mixture, along with the lower labile P and Fe concentration in the sediment pore water in the O-Fe-BC group compared to other groups, suggested the enhanced P immobilization. Further mechanism exploration revealed the combined roles of adsorption and microbial response, in which O-Fe-BC achieved efficient phosphate adsorption primarily through inner-sphere complexation via ligand exchange and keystone taxa (particularly Candidatus Electronema) played a crucial role in driving water chemistry divergence. Specially, these cable bacteria could provide large pools of Fe oxides in the surface sediment, binding with P to prevent its release, as supported by significant correlations between Ca. Electronema abundance and oxidation–reduction potential (ORP), TP, SRP, and sediment Fe-P variations. Additionally, a pot experiment with mung bean seedlings showed that the recovered O-Fe-BC significantly promoted the seed germination and growth, indicating its potential as a novel material for removing and recovering P from eutrophic waters. Taken together, our work provided a promising strategy for sustainable anoxia and P pollution mitigation, and also highlighted the indispensable roles of inner-sphere adsorption in P recovery and microbial keystone taxa in P cycling regulation.