Mo‐ and Fe‐containing enzymes catalyze the reduction of nitrate and nitrite ions in nature. Inspired by this activity, we study here the nitrate reduction reaction (NO3RR) catalyzed by an Fe‐substituted two‐dimensional molybdenum carbide of the MXene family, viz., Mo2CTx : Fe (Tx are oxo, hydroxy and fluoro surface termination groups). Mo2CTx : Fe contains isolated Fe sites in Mo positions of the host MXene (Mo2CTx) and features a Faradaic efficiency (FE) and an NH3 yield rate of 41 % and 3.2 μmol h−1 mg−1, respectively, for the reduction of NO3− to NH4+ in acidic media and 70 % and 12.9 μmol h−1 mg−1 in neutral media. Regardless of the media, Mo2CTx : Fe outperforms monometallic Mo2CTx owing to a more facile reductive defunctionalization of Tx groups, as evidenced by in situ X‐ray absorption spectroscopy (Mo K‐edge). After surface reduction, a Tx vacancy site binds a nitrate ion that subsequently fills the vacancy site with O* via oxygen transfer. Density function theory calculations provide further evidence that Fe sites promote the formation of surface O vacancies, which are identified as active sites and that function in NO3RR in close analogy to the prevailing mechanism of the natural Mo‐based nitrate reductase enzymes.