In this study, an iron-coated montmorillonite composite (FMC) was prepared, and the adsorption and immobilization of cadmium (Cd) was investigated. The composite was coated with spherical amorphous iron (Fe), which can promote the adsorption of Cd. At the fifth minute of adsorption, the rate of Cd adsorption by the FMC reached 97.8%. With temperature, the adsorption of Cd by FMCs first increases and then decreases. High pH can promote Cd adsorption; under the same ionic strength, the adsorption of Cd was greater by montmorillonite (Mont) than that by the FMC at pH < 4, but greater by FMC than that by Mont at pH > 4. High ionic strength had negative effects on Cd(II) adsorption by FMC and Mont, and ionic strength had less of an influence on the FMC than on Mont. Soil microorganisms promoted the dissolution of Fe and the release of Cd in the FMC. High temperature can promote the dissolution of Fe, but its effect on Cd release is not significant. At 32 °C, the Fe dissolution can promote Cd release in the FMC. Both the FMC and Mont reduced the bioavailability and leaching toxicity of Cd, reduced the exchangeable Cd, and increased the Fe-Mn bound and residual Cd. Overall, the FMC was more effective than Mont at immobilizing Cd.