Taking into account the H-2 generation during porous silicon (PS) formation, a special hydrothermal etching process was designed and carried out in HF aqueous solution containing Fe3+ ions. Several chemical reactions were found to take place on the surface of Si nanocrystallites, iron ion termination of Si dangling bonds, and formation of an outer layer of alpha -Fe2O3, which result in a stronger and more stable photoluminescence (PL) band peaking at 670 nm in comparison with normal PS. The improved PL was interpreted in terms of the decrease of the density of Si dangling bonds due to iron ion termination, and outer alpha -Fe2O3 layer protecting the inner c-Si from being oxidized.