This study employed first principles calculations to investigate Fe-doped Bi4O5Br2 as a potential photocatalyst with high efficiency. Based on formation energy calculation, the Fe atoms prefer to replace the Bi atoms with coordination bond of 3, and the optimal concentration for Fe-doping is 6.06[Formula: see text]wt.%. From surface energy calculations, the [Formula: see text] surface has the lowest surface energy, and therefore the easiest cleavage facet is [Formula: see text]. The key factors for the improvement of photocatalytic efficiency after Fe-doped Bi4O5Br2 are estimated as follows. First, the band gap decreases from 2.63[Formula: see text]eV in pristine case to 2.40[Formula: see text]eV in 4 Fe-doped Bi4O5Br2 case, resulting in the photon absorption edge shift to lower energy range and the absorption coefficient increase. Secondly, the work functions decrease from 5.66 eV (pristine) to 4.92[Formula: see text]eV (4 Fe-doped Bi4O5Br2), which facilitate the electrons escaping from the surface. Thirdly, the relative mass ratio of photo-induced electrons and holes increases with Fe concentration. Because the Fe 3[Formula: see text] impurity states in the forbidden band gap become wider, the relative ratio increased after Fe-doped Bi4O5Br2. Finally, the Fe doping process introduces more active sites on the surface, which can effectively improve the capacity of target molecules adsorption. Therefore, it is reasonable to believe that Fe-doped Bi4O5Br2 can effectively improve the photocatalytic efficiency because the abovementioned key factors have tremendously improved. Our work provides a reasonable reason for choosing Fe as a dopant, which can help our experimental work and provide explanation for photocatalytic efficiency improvement.