In the context of NdFeB magnets recycling, solvent extraction of lanthanides using diglycolamides is promising but their separation from iron(III) remains a challenge. Here, the extraction mechanisms of iron(III) and neodymium by TODGA (N,N,N′,N′-tetraoctyldiglycolamide) were examined in chloride medium. The choice of chloride media was driven by the efficiency of HCl in dissolving NdFeB magnets. Neodymium was chosen as a representative lanthanide to examine the co-extraction mechanism. For the extraction of iron(III), UV–visible and FT-IR spectra provide evidence for the extraction of FeCl4- with the participation of TODGA carbonyl groups. For the extraction with both elements, the solvent extraction study points out that there is co-extraction of neodymium and iron(III). Neodymium(III) extraction percentage increases from 6 to more than 97 % by adding iron(III). From spectroscopic studies (UV–visible, FT-IR) and thermodynamic modelling of extraction data, it is shown that three molecules of TODGA extract neodymium, as for neodymium-only extraction. They also reveal the presence of Fe(III) as FeCl4- anion in the outer sphere of [Nd(TODGA)3]3+. This brings to the conclusion that [Nd(TODGA)3](FeCl4)3 complex is formed in the organic phase. DFT (Density Functional Theory) calculations confirm that FeCl4- can replace Cl- in the outer sphere of [Nd(TODGA)3]3+, in a two-step reaction, with the initial formation of [Nd(TODGA)3]Cl3 followed by the binding of FeCl3 to the outer-sphere chloride ion. These results pave the way to the design of new diglycolamides that are selective towards iron(III) from chloride medium. The complete dissolution solution of NdFeB is represented by a highly acidic medium (a solution of 3 M HCl), whereas the leaching solution (partial dissolution of NdFeB) is represented by a weakly acidic medium (NaCl).