Nanocomposite hydrogels, bearing different functional groups, are potential materials for removing contaminants from water with high capacity and selectivity. A novel polyfunctional nanocomposite hydrogel (NCHG) was developed for the treatment of radioactive waste. It is based on magnetic composite nanoparticles (MCNPs) formed by encapsulating magnetite in polystyrene-co-polymethacrylic acid (PS-co-PMAA) miniemulsion. The MCNPs were then used as a physical crosslinker for the graft polymerization of sodium styrene sulfonate SSS and acrylic acid AA in the presence of polyacrylamide PAM to form an interconnected NCHG bearing different functional groups. The NCHG was characterized by FTIR, DLS, and TEM. The results indicated that a successful encapsulation of magnetite NPs took place and the MCNPs were ~100 nm in size. The presence of the MCNPs in the graft polymerization system greatly enhanced the conversion %. The optimum ultrasound homogenization of the polymerization reaction was found to be 11 min and the optimum gamma radiation dose for the initiation of polymerization reaction was 25 kGy. The NCHG was used for the removal of Cs+, Co2+, and Sr2+ ions from simulated radioactive waste. The initial concentration was studied from 50 to 600 mg/L, and the equilibrium adsorption capacities of Cs+, Co2+, and Sr2+ were found to increase from 8.49 to 53.37, 11.17–80.69, and 10.75–65.35 mg/g, respectively. The calculated thermodynamic parameters namely, Gibbs free energy (ΔG°), Enthalpy (ΔH°) and entropy (ΔS°) indicated an endothermic chemisorption process.