A novel method that uses the aqueous sodium alginate solution for direct gelation with metal ions is developed for effective removal and recovery of heavy metals from industrial wastewater. The experimental study was conducted on Pb2+, Cu2+, and Cd2+ as the model heavy metals. The results show that gels can be formed rapidly between the metals and alginate in less than 10 min and the gelation rates fit well with the pseudo second-order kinetic model. The optimum dosing ratio of alginate to the metal ions was found to be between 2:1 and 3:1 for removing Pb2+ and around 4:1 for removing Cu2+ and Cd2+ from wastewater, and the metal removal efficiency by gelation increased as the solution pH increased. Alginate exhibited a higher gelation affinity toward Pb2+ than Cu2+ and Cd2+, which allowed a selective removal of Pb2+ from the wastewater in the presence of Cu2+ and Cd2+ ions. Chemical analysis of the gels suggests that the gelation mainly occurred between the metal ions and the COO− and OH groups on alginate. By simple calcination of the metal-laden gels at 700 °C for 1 h, the heavy metals can be well recovered as valuable resources. The metals obtained after the thermal treatment are in the form of PbO, CuO, and CdO nanopowders with crystal sizes of around 150, 50, and 100 nm, respectively.