Low-cost activated carbons were prepared by physical activation of bio-waste rice husk. Various physicochemical characterization techniques confirmed the high surface area and oxygen functional groups on the surface. It has been confirmed that activation under humidified carbon dioxide followed by ozonation resulted the highest number of surface functional groups on activated carbon. Nitrogen adsorption–desorption isotherms confirmed the highest surface area (417 m2/g), whereas elemental analysis ensured the increasing oxygen content after activation. Temperature-programmed decomposition quantified these surface oxygen functional groups, and it was concluded that ozonation increased both acidic and basic groups. The developed activated carbons were tested during the removal of a model dye methylene blue from aqueous medium in the concentration range 10–30 mg/L. Typical results indicated that adsorption studies are consistent with the Langmuir isotherm model with maximum monolayer adsorption capacity of 28.5 mg/g, and the dimensionless separation factor (R L) values between 0.006 and 0.030 confirmed a favorable adsorption. Methylene blue adsorption followed pseudo-second order kinetics indicating MB was adsorbed onto the surface via chemical interaction.