One of the problems in drinking water that raises concern over the world is that millions of people still have to use arsenic-contaminated water. There is a worldwide need to develop appropriate technologies to remove arsenic from water for household and community water supply systems. In this study, a new material namely iron oxide coated sponge (IOCSp) was developed and used to remove arsenic (As) from contaminated groundwater in Vietnam. The results indicated that IOCSp has a high capacity in removing both As (V) and As (III). The adsorption capacity of IOCSp was up to 4.6 mg As/g IOCSp, showing better than many other materials. It was observed from a pilot study that a small quantity of IOCSp (180 g) could reduce As concentration of 480 μg/L in 1.5 m3 of contaminated natural water to below 40 μg/L. In addition, an exhausted IOCSp, containing a large amount of arsenic (up to 0.42 wt %) could safely be disposed through the solidification/stabilization with cement. Addition of fly ash also reduced the amount of arsenic in the leachate.