Nanocrystalline Fe-doped TiO2 powders were prepared using TiOSO4, urea, and Fe(NO3)3 · 9H2O as precursors through a hydrothermal method. The as-synthesized yellowish-colored powders are composed of anatase TiO2, identified by X-ray diffraction (XRD). The grain size ranged from 9.7 to 12.1 nm, calculated by Scherrer’s method. The specific surface area ranged from 141 to 170 m2/g, obtained by the Brunauer–Emmett–Teller (BET) method. The transmission electron microscopy (TEM) micrograph of the sample shows that the diameter of the grains is uniformly distributed at about 10 nm, which is consistent with that calculated by Scherrer’s method. Fe3+ and Fe2+ have been detected on the surface of TiO2 powders by X-ray photoelectron spectroscopy (XPS). The UV–Vis diffuse reflection spectra indicate that the light absorption thresholds of the Fe-doped TiO2 powders have been red-shifted into the visible light region. The photocatalytic activity of the Fe-doped TiO2 was evaluated through the degradation of methylene blue (MB) under visible light irradiation. The Fe-doped TiO2 powders have shown good visible-light photocatalytic activities and the maximum degradation ratio is achieved within 4.5 h.