This paper investigates the effect of Fe substitution on the structural, magnetic and transport properties of the La0.7Sr0.3MnxFe1-xO3 (LSMO) system where x ranged between 0 and 0.15. Samples were prepared using a non-aqueous sol-gel synthesis method. Structural and chemical analysis confirmed the Fe 3+ substitution at Mn 3+ sites without any impurity phase resulted in a small change in structural parameters of the LSMO. The change in magnetic behavior and Curie temperature of the Fe-doped LSMO is explained through competitive exchange interactions developed in the system. The temperature-dependent resistivity demonstrated that the resistivity of the samples increased with Fe concentration due to different conduction mechanisms related to the ferromagnetic-metallic and paramagnetic-insulating regions. The magneto-transport measurement showed significant improvement in the magnetoresistance due to Fe doping at Mn site, which was attributed to enhancement of the spin-glass phase in Fe doped LSMO system. The reduction in magnetoresistance for higher Fe concentration is explained with the help of percolation threshold mechanism.