In the deep geological repository of high-level nuclear waste (HLW), the interaction of carbon steel (Fe) overpack container and the back-fill clay mineral, montmorillonite (mont), is an important issue to be clarified in view of the long-term performance of clay mineral as an engineered barrier. To arrive at some understanding of the altered clay at the Fe/clay interface, Fe(III)-mont is used here for preliminary investigation to see if there is any considerable difference in the basic properties, mainly diffusion of tracers with respect to Na-mont, although Fe(III)-mont is not a realistic analogue of altered clay in the reducing chemistry conditions anticipated in the subsurface of HLW, unlike Fe(II)-mont which is difficult to prepare and handle in the ambient atmosphere due to its gradual oxidation. Fe(III)-mont was prepared by the conventional cation exchange method with 0.4 M FeCl 3 solution. The total Fe(III) ions adsorbed was about 1.42 meq/g, while the CEC of parent clay was 1.2 meq/g. Thus ∼ 18% excess Fe(III) ions were present presumably as iron oxy hydroxide, i.e., about 2 wt.% with respect to FeOOH or Fe(OH) 3 in the bulk sample. The sample was further characterized by X-ray diffraction (XRD), infrared (IR), thermogravimetry, magnetization, and the methylene blue (MB) adsorption. From these conventional techniques, the minor Fe-oxide phase associated with the Fe(III)-mont could not be detected, although we cannot rule out its existence. The paramagnetic behavior of Fe(III)-mont was evident from the Curie–Weiss plot (300 K down to 5 K). Some basic properties like osmotic swelling, diffusion of tracers and thermal stability are evaluated here. The osmotic swelling of Fe(III)-mont was very low, ∼ 5 ml/g, while that of Na-mont was > 40 ml/g. Apparent diffusion coefficient ( D a) of tracers viz., 22Na +, HTO and 36Cl − was determined using compacted (dry density, ρ d = 1.0, 1.6 Mg m − 3 ), water-saturated Fe(III)-mont. There was no considerable change in D a of these tracers in Fe(III)-mont when compared to that in Na-mont, in spite of higher pore water availability in Fe(III)-mont due to reduced swelling. For instance at ρ d = 1.6 and 25 °C, D a (×10 − 11 m 2/s) of 22Na + (2.6) was same as that in Na-mont whereas D a of HTO (11.4) and 36Cl − (1.0) have varied marginally. For comparison, the corresponding D a (×10 − 11 m 2/s) values in Na-mont were 2.7, 7.2 and 3.4, respectively. Also, at ρ d = 1.6, the diffusion activation energy ( E A, kJ mol − 1 ) of HTO (17.5) in Fe(III)-mont was comparable to that in free water, however, E A of 36Cl − (13.1) was remarkably low, which may be ascribed to the so-called ‘anion exclusion’ effect. Furthermore, thermal stability of Fe(III)-mont indicated the existence of interlayer Fe(III) in the ionic state up to ∼ 190 °C, based on the XRD and MB adsorption test. On heating to > 200 °C, irreversible dehydration of interlayer cations occurred, and the chemisorption of NH 3 indicated two distinct acid sites at about 300 °C and 600 °C.