The influence of Fe addition on thermal stability, crystallography, and magnetic properties of τ-Mn51Al47C2 was investigated. Alloys with composition 0.5,1,2,and 4) were synthesized by mechanical alloying method. High purity of τ-Mn(Fe)AlC up to 98% could be obtained after 10h of milling, then annealed at 1050 o C for 1h, and followed by an aging process at appropriate temperatures from 515 to 540 o C for 50 minutes. It was found that the thermal stability of both ε and τ phases was enhanced by the addition of Fe up to 4 at.% into MnAlC alloy through a shifting of ε-to-τ transformation temperature to high temperature region and a reduction in c/a ratio of Fe doped τ-MnAlC compared to iron free τ-MnAlC. While the magnetization and Curie temperature of Fe doped τ-MnAlC showed a reduction compared to iron free τ-Mn51Al47C2, coercivity seems not to be significantly affected.Ab initio calculation showed a lower magnetic moment of Fe (µFe = 1.77 µB) compared to Mn (µMn_average = 2.36 µB) in τ-Mn(Fe)AlC when Fe substituted Mn position at 1a site.