Herein, a Schiff base, 4-(2-hydroxybenzylideneamino) benzoic acid (HBBA) was synthesized and characterized by FT-IR, 1H NMR and single crystal X-ray. The geometrical parameters calculated for the structure prepared using DFT methods were in close agreement with the experimentally observed values. Hirshfeld surface analysis performed on the crystal structure to explore various intramolecular interactions in the molecule. The band gap and molecular electrostatic potential were calculated using DFT method in order to support charge transfer. Hyperconjugative interactions and electron densities of donor (i) and acceptor (j) were explored using NBO analysis. Photophysical studies revealed the dependency of absorption profile on the pH of the medium. Thermodynamic properties calculated using DFT method revealed a correlations of heat capacity (C), entropy (S) and enthalpy changes (H) with temperatures. The sensor is specific towards Fe3+ ions with turn-off response and reversibility in its fluorescence profile upon addition of EDTA. The proposed was successfully applied for the real time detection of Fe3+ in water samples with good accuracy. The limit of detection observed for the developed sensor was lower than the World health organization (WHO) guidelines (5.00 μM) for drinking water.