The loss of melanized neurons in the substantia nigra pars compacta is a primary feature in Parkinson’s disease. Iron deposition occurs in conjunction with this loss. Loss of nigral neurons should remove barriers for diffusion and increase diffusivity of water molecules in regions undergoing this loss. In metrics from single-compartment diffusion tensor imaging models, these changes should manifest as increases in mean diffusivity and reductions in fractional anisotropy as well as increases in the free water compartment in metrics derived from bi-compartment models. However, studies examining nigral diffusivity changes from Parkinson’s disease with single-compartment models have yielded inconclusive results and emerging evidence in control subjects indicates that iron corrupts diffusivity metrics derived from single-compartment models. We aimed to examine Parkinson’s disease-related changes in nigral iron and diffusion measures from single- and bi-compartment models as well as assess the effect of iron on these diffusion measures in two separate Parkinson’s cohorts. Iron-sensitive data and diffusion data were analysed in two cohorts: First, a discovery cohort consisting of 71 participants (32 control participants and 39 Parkinson’s disease participants) was examined. Second, an external validation cohort, obtained from the Parkinson’s Progression Marker’s Initiative, consisting of 110 participants (58 control participants and 52 Parkinson’s disease participants) was examined. The effect of iron on diffusion measures from single- and bi-compartment models was assessed in both cohorts. Measures sensitive to the free water compartment (discovery cohort: P = 0.006; external cohort: P = 0.01) and iron content (discovery cohort: P < 0.001; validation cohort: P = 0.02) were found to increase in substantia nigra of the Parkinson’s disease group in both cohorts. However, diffusion markers derived from the single-compartment model (i.e. mean diffusivity and fractional anisotropy) were not replicated across cohorts. Correlations were seen between single-compartment diffusion measures and iron markers in the discovery cohort (iron-mean diffusivity: r = −0.400, P = 0.006) and validation cohort (iron-mean diffusivity: r = −0.387, P = 0.003) but no correlation was observed between a measure from the bi-compartment model related to the free water compartment and iron markers in either cohort. In conclusion, the variability of nigral diffusion metrics derived from the single-compartment model in Parkinson’s disease may be attributed to competing influences of increased iron content, which tends to drive diffusivity down, and increases in the free water compartment, which tends to drive diffusivity up. In contrast to diffusion metrics derived from the single-compartment model, no relationship was seen between iron and the free water compartment in substantia nigra.