The Fe(III)-doped montmorillonite (Mt)/TiO2 composites were fabricated by adding Fe(III) during or after the aging of TiO2/Ti(OH)4 sol–gel in Mt, named as xFe-Mt/(1 − x)Fe-TiO2 and Fe/Mt/TiO2, respectively. In the xFe-Mt/(1 − x)Fe-TiO2, Fe(III) cations were expected to be located in the structure of TiO2, in the Mt, and in the interface between them, while Fe(III) ions are physically adsorbed on the surfaces of the composites in the Fe/Mt/TiO2. The narrower energy bandgap (Eg) lower photo-luminescence intensity were observed for the composites compared with TiO2. Better photocatalytic performance for phenol degradation was observed in the Fe/Mt/TiO2. The 94.6% phenol degradation was due to greater charge generation and migration capacity, which was confirmed by photocurrent measurements and electrochemical impedance spectroscopy (EIS). The results of the energy-resolved distribution of electron traps (ERDT) suggested that the Fe/Mt/TiO2 possessed a larger amorphous rutile phase content in direct contact with crystal anatase than that of the xFe-Mt/(1 − x)Fe-TiO2. This component is the fraction that is mainly responsible for the photocatalytic phenol degradation by the composites. As for the xFe-Mt/(1 − x)Fe-TiO2, the active rutile phase was followed by isolated amorphous phases which had larger (Eg) and which did not act as a photocatalyst. Thus, the physically adsorbed Fe(III) enhanced light adsorption and avoided charge recombination, resulting in improved photocatalytic performance. The mechanism of the photocatalytic reaction with the Fe(III)-doped Mt/TiO2 composite was proposed.