Iron-doped bismuth sulphide (Bi_2−xFe_xS₃) nanocrystals have been successfully synthesized in a glass matrix using the fusion method. Transmission electron microscopy images and energy dispersive spectroscopy data clearly show that nanocrystals are formed with an average diameter of 7–9 nm, depending on the thermic treatment time, and contain Fe in their chemical composition. Magnetic force microscopy measurements show magnetic phase contrast patterns, providing further evidence of Fe incorporation in the nanocrystal structure. The electron paramagnetic resonance spectra displayed Fe³⁺ typical characteristics, with spin of 5/2 in the 3d⁵ electronic state, thereby confirming the expected trivalent state of Fe ions in the Bi₂S₃ host structure. Results from the spin polarized density functional theory simulations, for the bulk Fe-doped Bi₂S₃ counterpart, corroborate the experimental fact that the volume of the unit cell decreases with Fe substitutionally doping at Bi1 and Bi2 sites. The Bader charge analysis indicated a pseudo valency charge of 1.322|e| on Fe_Bi1 and 1.306|e| on Fe_Bi2 ions, and a spin contribution for the magnetic moment of 5.0 µ_B per unit cell containing one Fe atom. Electronic band structures showed that the (indirect) band gap changes from 1.17 eV for Bi₂S₃ bulk to 0.71 eV (0.74 eV) for Bi₂S₃:Fe_Bi1 (Bi₂S₃:Fe_Bi2). These results are compatible with the 3d⁵ high-spin state of Fe³⁺, and are in agreement with the experimental results, within the density functional theory accuracy.