Sodium hydroxide (NaOH) has been used as an alkali source in conventional hydrogen peroxide bleaching. In the present work, partial and total replacement of NaOH with magnesium hydroxide (Mg(OH)2) as the alkali source for hydrogen peroxide bleaching of deinked pulp was studied. The bleached pulp was studied with respect to brightness, post color (P.C.) number, and mechanical properties (i.e., the tensile, tear, and burst indices). The bleaching effluent was measured for residual peroxide, pH value, and chemical oxygen demand (COD). The main results from this work were that the brightness and mechanical properties of bleached pulp increased while the P.C. number declined when NaOH was partially replaced with Mg(OH)2. However, the total substitution of NaOH with Mg(OH)2 resulted in a slight decrease in the brightness and mechanical properties in comparison with NaOH as the sole alkali source. Additionally, the residual peroxide of the bleaching filtrate increased from 3% to 61% and the COD load of the bleaching effluent decreased from 20% to 25% when NaOH was replaced with Mg(OH)2 at various replacement ratios.