The effects of Fe addition on martensitic transformation and mechanical properties of AuTi were investigated in this study. It was found that B2 parent phase is stabilized by the Fe addition and that AuTi can contain at least 20mol%Fe. The lattice deformation strain evaluated from θ-2θ X-ray diffraction analysis (XRD) is not significantly changed by the Fe addition. The decrease in Ms evaluated by differential scanning calorimetry (DSC) is -40K/mol%Fe. Tensile tests revealed that, with increasing Fe content, the yield stress decreases up to about 13mol%Fe, largely increases up to 15mol%Fe and then decreases gradually. By taking into account XRD and DSC results, these behaviors are judged to correspond to reorientation of martensite variants, stress induced martensitic transformation and slip deformation of parent phase, respectively. The values of dσSIMT/dCFe and dσSIMT/dT are evaluated to be -170MPa/mol%Fe and -4.3MPa/K, respectively. The elongation is degraded with increasing Fe content from 8% in AuTi (0mol%Fe, martensite phase) to 2% in AuTi- 20mol%Fe (parent phase) depending on the apparent phase.