The development of reliable and highly sensitive methods for heavy metal detection is a critical task for protecting the environment and human health. In this study, a qualitative colorimetric sensor that used mercaptosuccinic-acid-functionalized gold nanoparticles (MSA-AuNPs) to detect trace amounts of Fe(III) ions was developed. MSA-AuNPs were prepared using a one-step reaction, where mercaptosuccinic acid (MSA) was used for both stabilization, which was provided by the presence of two carboxyl groups, and functionalization of the gold nanoparticle (AuNP) surface. The chelating properties of MSA in the presence of Fe(III) ions and the concentration-dependent aggregation of AuNPs showed the effectiveness of MSA-AuNPs as a sensing probe with the use of an absorbance ratio of A530/A650 as an analytical signal in the developed qualitative assay. Furthermore, the obvious Fe(III)-dependent change in the color of the MSA-AuNP solution from red to gray-blue made it possible to visually assess the metal content in a concentration above the detection limit with an assay time of less than 1 min. The detection limit that was achieved (23 ng/mL) using the proposed colorimetric sensor is more than 10 times lower than the maximum allowable concentration for drinking water defined by the World Health Organization (WHO). The MSA-AuNPs were successfully applied for Fe(III) determination in tap, spring, and drinking water, with a recovery range from 89.6 to 126%. Thus, the practicality of the MSA-AuNP-based sensor and its potential for detecting Fe(III) in real water samples were confirmed by the rapidity of testing and its high sensitivity and selectivity in the presence of competing metal ions.