A layered composite of Fe2O3-pillared bentonite (Fe-P-Bet), used as a catalyst in a Fenton-like process, was prepared and then its mechanical activation was studied in detail. The optimum conditions for preparation of Fe-P-Bet and the effects of mechanical activation on the catalytic activity of Fe-P-Bet were investigated systematically. The impact of the mechanical activation on the catalytic activity was affected by the filling ratio of the grinding medium, by the combination of different sized milling balls, by the rotation speed of the planet carrier, by the milling time and by the powder-to-ball ratio. Compared with the removal ratio of orange II of 14.5%, catalysed by Fe-P-Bet, the removal ratio catalysed by activated Fe2O3-pillared bentonite (A-Fe-P-Bet) was as high as 93.6%, and A-Fe-P-Bet had the merit of good stability and only a small amount of Fe leaching during the Fenton-like process. The catalysts prepared were characterized by scanning electron microscopy, transmission electron microscopy, X-ray diffraction and by the BET method; A-Fe-P-Bet has a small particle size and a rough surface. The lattice distortion and decrease in the crystal size of α-Fe2O3, as well as damage to the layer structure of smectite in the bentonite, were the main reasons for the increase in the catalytic activity of A-Fe-P-Bet. The results indicated that mechanical activation was an easy and effective method for improving the catalytic activity of this bentonite-based layered composite and that A-Fe-P-Bet was a safe, ‘green’, catalyst material for use in Fenton-like oxidation during treatment of wastewater.