A novel modified Fenton process using heterogeneous catalyst (swarf) was developed to catalyze the oxidation reaction of azo dye Acid Red 18. It was found that swarf could be used to replace iron salts as a catalyst for the Fenton reaction. The examined continuous Fenton process proved to be very efficient for decolorization of simulated wastewater containing 100 mg/dm³ Acid Red 18. Performance of the Fenton reactor and regeneration method of the catalyst was discussed. The simplified mechanism of hydroxyl radical production in the presence of swarf as a catalyst also was proposed.