Mossbauer spectroscopy and IR techniques were employed to characterize the iron-impregnated montmorillonite K10 clay catalysts, prepared by using acetonitrile or water solutions of iron(III) chloride. Samples prepared in a non-aqueous medium consisted of comparable amounts of alpha-Fe2O3 and FeOOH, whereas those prepared in an aqueous medium showed only FeOOH-type species. The higher catalytic activity obtained using a non-aqueous medium for alkylation of arenes with benzyl chloride is attributed to the additional Lewis-type acidic sites associated with iron oxide.