To overcome the drawbacks associated with iodine e.g. insolubility in water, etc., it has been complexed with polymers that have the ability to bind it. In this study, gum arabic (GA), a natural gum was functionalized to introduce new reactive groups that can easily interact with small molecules followed by iodination in ethanol solution to prepare an iodine complex. The samples were characterized by FTIR, thermogravimetric analysis (TGA) and differential scanning calorimetry (DSC). The synthesized iodine complex was found reddish-brown in colour and stable at room temperature. The interaction of free available iodine with functionalized GA was also studied and established by UV-vis spectrophotometer. The amount of iodine released in water was measured by iodometric titration method and its value compared with the available iodine complex, polyvinylpyrrolidone-iodine complex. The antimicrobial activity of iodine complex was tested against Escherichia coli (Gram negative bacteria) and found to be effective against it.