This study is the first work that evaluated the effectiveness of unmodified (SD) and modified biochar with ammonium hydroxide (SD-NH2) derived from sawdust waste biomass as an additive for biogas production from red algae Pterocladia capillacea either individually or in combination with hematite α-Fe2O3 NPs. Brunauer, Emmett, and Teller, Fourier transform infrared, thermal gravimetric analysis, X-ray diffraction, transmission electron microscopy, Raman, and a particle size analyzer were used to characterize the generated biochars and the synthesized α-Fe2O3. Fourier transform infrared (FTIR) measurements confirmed the formation of amino groups on the modified biochar surface. The kinetic research demonstrated that both the modified Gompertz and logistic function models fit the experimental data satisfactorily except for 150 SD-NH2 alone or in combination with α-Fe2O3 at a concentration of 10 mg/L. The data suggested that adding unmodified biochar at doses of 50 and 100 mg significantly increased biogas yield compared to untreated algae. The maximum biogas generation (219 mL/g VS) was obtained when 100 mg of unmodified biochar was mixed with 10 mg of α-Fe2O3 in the inoculum.