Ce0.67Zr0.33O2 doped with iron oxide was prepared and the corresponding Pd-only three-way catalysts were examined and characterized. Pd/CZFe(1%) catalyst exhibits the best catalytic performance for CO, HC, NO and NO2 elimination and the widest operation window. The doping of iron oxide with 1% loading suggests the formation of more homogeneous Ce–Zr–Fe–O ternary solid solution, which seems to facilitate the reduction of Ce4+→Ce3+ or the formation of oxygen vacancy and to promote the interaction between Ce–Zr and Fe. Moreover, the Ce redox behaviour for surface reduction suggests depending not only on the formation of homogeneous Ce–Zr–Fe–O but also on the surface property of the sample. The increase in the concentration of oxygen vacancies under all atmospheres for CZFe(1%) sample also results in the enhancement of oxygen storage complete capacity.