The properties of the selenide compound Fe7Se8 with a layered crystal structure of the NiAs type are strongly influenced by substitutions and the distribution of vacancies. The Cr-substituted compound Fe6.5Cr0.5Se8 was obtained in single-crystalline form and studied by x-ray diffraction, energy-dispersive x-ray spectroscopy, thermal expansion and magnetization measurements. It was observed that the partial replacement of iron with chromium led to a twofold decrease in spontaneous volume magnetostriction due to changes in competing magnetoelastic contributions to thermal expansion along and perpendicular to the c axis of the crystal. The replacement of iron with chromium slightly decreases the Néel temperature (from 440 to 435 K) and significantly enhances the critical temperature of spin reorientation transition Tsr (from 115 to 160 K), apparently due to a change in the crystal electric field. Below 160 K, the Fe6.5Cr0.5Se crystal is found to exhibit metamagnetic-like behavior of the magnetization when the magnetic field is applied along the c axis. A jump-like change of the magnetization at a critical field up to ∼10 kOe is attributed to the presence of pinning centers of domain walls presumably due the ordering of chromium atoms substituting iron in cationic layers.