We have investigated the effect of Fe substitution on the structural and superconducting properties of La2.5Y0.5CaBa3(Cu1−x Fe x )7O z system by Rietveld refinement of the neutron diffraction patterns of three samples with x = 0.02 (labelled B1), x = 0.06 (B2), and x = 0.10 (B3) along with X-ray diffraction, resistivity, AC susceptibility, and oxygen-content measurements. Samples B1, B2, and B3 are superconducting with T c R=0 values of 73, 62, and 41 K, respectively. Neutron diffraction studies confirm (i) the formation of a single phase tetragonal structure (space group P4/mmm) for all three samples, (ii) Ca and Y ions substitution at the La site concomitantly displaces La onto Ba sites, and (iii) increasing x from 0.02 to 0.10 increases oxygen content (the amount of oxygen per unit cell), as well as Cu(1)— O(4) and Cu(1)— O(1) bond lengths whereas Cu(2)— O(4) bond length decreases with corresponding decrease in T c to 41 K due to increasing occupancy of Fe ions at Cu(2) site. The change in bond lengths with oxygen content are essentially the same as those of Fe content (x). Present studies establish a correlation between the bond lengths (Cu(1)— O(1), Cu(1)— O(4), and Cu(2)— O(4)) and the measured T c values of three samples.