A first principles density function investigation of the structural, electrical and optical properties of iron-doped ZnO (0 0 0 1) surfaces is conducted by considering the substitutional sites in the three relaxed ZnsbndO bilayers and the interstitial site in the centre of the octahedron surrounded by zinc atoms. Calculations are performed with the GGA + U approach which can accurately estimate the energy of strong correlation semiconductors. The calculated results show that the iron atom energetically prefers to occupy the zinc site on the topmost ZnsbndO bilayer of ZnO (0 0 0 1) surface. Compared with the pristine ZnO (0 0 0 1) surface, the Fe-3d states will generate several impurity levels in the forbidden band of the material system doped by the iron atom in the three substitutional sites, whereas they will shift the conduction band to a-low energy region and reduce the bandgap to 1.434 eV in the interstitial site. Electron density difference calculation confirms the bonding situation among iron atom and the neighboring oxygen and zinc atoms. Comparison of the absorption coefficients of the pristine and iron-doped ZnO (0 0 0 1) surface systems shows that light absorption is significantly enhanced from 0 to 3.5 eV. The absorption peak of the substitutional sites shifts to lower energy while the absorption peak of the interstitial site shifts to 2.23 eV. This work is beneficial for the development of ZnO photocatalyst.