A new technique has been developed for the purification of industrial wastewater by synthesizing an innovative Gaunidine based terpolymer composite gaining a considerable attention in the wastewater treatment community. In the present research work the terpolymer resin was synthesized involving 4-Hydroxybenzaldehyde and Gaunidine with formaldehyde and the novel composite was prepared using terpolymer and activated charcoal for the recovery of toxic and heavy metals from aqueous solutions. The structure and properties of the terpolymer and terpolymer activated charcoal composite were observed by various characterization techniques such as elemental analysis, FTIR, UV–Visible, XRD and SEM. Batch separation technique has been used in the ion-exchange process for the removal of heavy selected divalent metal ions like Cu2+, Zn2+, Co2+, Cd2+, Pb2+ by terpolymer and its composite. The investigation was carried out over a range of concentrations, different electrolytes, a wide pH range, and varying flow rates. The selectivity order for metal ion removal by the terpolymer was Zn²⁺ > Cu²⁺ > Co²⁺ > Pb²⁺ > Cd²⁺, whereas for the composite it was Pb²⁺ > Cd²⁺ > Cu²⁺ > Co²⁺ > Zn²⁺. The variation in selectivity order may be attributed to differences in particle size, high porosity, large surface area, and the intrinsic properties of both the material and the metal ions. The ion-exchange behaviour of the terpolymer and its composite was further evaluated. The thermal degradation behavior of the terpolymer and its composite was also examined using thermogravimetric analysis (TGA). The kinetic and thermodynamic parameters were calculated by applying the Freeman–Carroll (FC) and Sharp–Wentworth (SW) methods. The decomposition of the terpolymer followed first-order kinetics, whereas the composite exhibited a higher-order reaction. The calculated activation energy, frequency factor, and entropy change values indicate that both the terpolymer and its composite possess good thermal stability.