The synthesis, crystal structure, and physicochemical properties of new Indolium based nonlinear optical crystal of 2-(2-(4-(4-chloro) phenyl) vinyl)-1, 1, 3-trimethyl-1H-benzo[e] Indolium iodide (CBI) is reported here. The title crystal was grown by slow evaporation technique using methanol as a solvent and it is subjected to a single crystal X-ray diffraction study to confirm the crystallographic structure and found that it belongs to the monoclinic crystal system with a space group of P21/n. The band gap and optical window of the material are studied from UV-visible spectroscopic analysis, and the corresponding values are 4.2 eV and 295–800 nm, respectively. Thermal analysis reveals that the grown crystal is thermally stable up to 264°C and the high-temperature stability is favorable for industrial applications. Furthermore, we have studied the dielectric properties such as dielectric constant and dielectric losses and they are investigated by impedance spectroscopic analysis at various temperatures. The electronic charge transfers on the molecules are studied from the density functional theory. The various intermolecular interactions which are existed in the crystal are explored from Hirshfeld surface analysis. Finally, the Z-scan studies parameters expose that title crystal is a potential material for third-harmonic generation applications. The overall structural studies and functional properties disclose that the grown crystal is well suitable for third-harmonic generation applications.