Peracetic acid (PAA) is an alternative disinfectant for saline wastewaters, and hypohalous acids are typically regarded as the reactive species for oxidation and disinfection. However, new results herein strongly suggest that reactive radicals instead of HOI primarily contributed to decontamination during PAA treatment of iodine-containing wastewater. The presence of I- could greatly accelerate the micropollutants (e.g., sulfamethoxazole (SMX)) transformation by PAA. Chemical probes experiments and electron paramagnetic resonance analysis demonstrate acetylperoxyl radical rather than reactive iodine species primarily responsible for SMX degradation. The kinetic model was developed to further distinguish and quantify the contribution of radicals and iodine species, as well as to elucidate the transformation pathways of iodine species. Density functional theory calculations indicated that the nucleophilic attack of I- on the peroxide bond of PAA could form unstable O−I bond, with the transition state energy barrier for radical generation lower than that for HOI formation. The transformation of iodine species was regulated by acetylperoxyl radical to generate nontoxic IO3-, greatly alleviating the iodinated DBPs formation in saline wastewaters. This work provides mechanistic insights in radical-regulated iodine species transformation during PAA oxidation, paving the way for the development of viable and eco-friendly technology for iodide containing water treatment.