Leveraging the liquid-phase immiscibility effect and phase diagram calculations, a sequence of alloy powders with varying Fe content was designed and fabricated utilizing the gas atomization method. Microstructural characterizations, employing SEM, EDS, and XRD analyses, revealed the successful formation of an incomplete shell on the surfaces of Al-Bi-Fe powders, obviating the need for Sn doping. This study systematically investigated the microstructure, hydrolysis performance, and hydrolysis process of these alloys in deionized water. Notably, Al-10Bi-7Fe exhibited the highest hydrogen production, reaching 961.0 NmL/g, while Al-10Bi-10Fe demonstrated the peak conversion rate at 92.99%. The hydrolysis activation energy of each Al-Bi-Fe alloy powder was calculated using the Arrhenius equation, indicating that a reduction in activation energy was achieved through Fe doping.