The quantum spin Hall (QSH) insulator exhibits various interesting physical properties. Therefore, researchers have been seeking QSH insulators with large bandgaps suitable for room temperature applications. Here, based on first-principles calculations, we predict that the chlorine atom functionalized AlBi monolayer forms a topological insulator with a large bandgap (Eg = 0.215 eV). Chlorination and SOC effect induce AlBi(Cl)2 band inversion, and phonon spectra calculations demonstrate excellent dynamic stability for AlBi(Cl)2. The Z2 topological invariants, as well as the topological nontrivial edge states further confirm these findings. In addition, we applied the biaxial strains ranging from −5% to 5% to the monolayer, revealing a topological phase transition at −3%, resulting in the emergence of a normal insulator. These interesting features suggest that chlorinated AlBi is a promising material for room temperature spintronic devices.