In order to investigate effect of iron on the performance of lead acid batteries, we systematically study the chemical characteristics, electrochemical characteristics, battery capacity and cycle life using iron-doped lead oxide in this article. Cyclic voltammetry results show that positive discharge current decreases sharply with the increasing content of Fe2O3 from 0.05wt.% to 2wt.%. The release of H2 and O2 are promoted accompanying the increase of Fe2O3 contents. The chemical analysis confirms that the strength of Fe3+, Fe2+ concentration is simultaneously increased with the increase of iron contents after 50 voltammetry cycles. X-ray diffraction phase analysis shows that the amount of PbSO4 increases with the increasing iron content in the positive plates after 50 discharge cycles. Morphologies of positive plates show that many agglomerates from PbSO4 crystals appear. The SEM observations illustrate that there is a lower porosity and specific surface area in the positive active material with iron after 50 discharge cycles. The mechanism of iron decreasing capacity, cycle-life and promoting the release of H2 and O2 has been elucidated in details. We support it is the “redox-diffusion” process of multiple-valence iron and formation of PbSO4 on electrodes that result in above performances.