Fe additives may play an important role in the preparation of aluminum-based hydrolysis hydrogen powder, with high hydrogen yield, low cost, and good oxidation resistance. Therefore, it is necessary to ascertain the effect of Fe on the hydrogen production performance of Al-Bi-Sn composite powders. According to the calculated vertical cross-section of the Al-10Bi-7Sn-(0~6)Fe (wt.%) quasi-binary system, Al-10Bi-7Sn-xFe (x = 0, 0.5, 1.5, 3) wt.% composite powders for hydrogen production were prepared by the gas-atomization method. The results showed that the Al-10Bi-7Sn-1.5Fe (wt.%) powder exhibited an extremely fast hydrogen generation rate at 50 °C, which reached 1105 mL·g−1 in 27 min in distilled water, 1086 mL·g−1 in 15 min in 0.1 mol·L−1 NaCl solution, and 1086 mL·g−1 in 15 min in 0.1 mol·L−1 CaCl2 solution. In addition, the antioxidant properties of these powders were also investigated. The results showed that the hydrogen production performance of the Al-10Bi-7Sn-1.5Fe (wt.%) powder could retain 91% of its hydrogen production activity, even though the powder was exposed to 25 °C and 60 RH% for 72 h. The addition of Fe not only promoted the hydrogen generation rate of the Al-Bi-Sn composite powders, but also improved their oxidation resistance. The Al-10Bi-7Sn-1.5Fe (wt.%) composite powder shows great potential for mobile hydrogen source scenarios with rapid hydrogen production.