Uptake of excess iron by lowland rice plants causes iron toxicity, which is a major problem in the affected areas. This study investigated molecular diversity, genetic structure, and marker–trait associations for tolerance to iron toxicity in a panel of germplasm lines using microsatellite markers. The studied population showed a moderate to high degree of genetic diversity, as revealed by the estimated molecular diversity parameters and principal component, cluster and box plot analyses. The landraces Mahipal, Dhusura, Dhabalabhuta, Champa, Sunapani and Kusuma were identified as suitable for cultivation in the areas affected by high iron levels. The landraces Dhusura, Kusuma, Kendrajhali, Ranisaheba, Panjabaniswarna, Mahipal, Dhinkisiali, Champa, Kalamara and Ratanmali, which showed low scores for tolerance, were considered good donors for iron toxicity tolerance improvement programs. Utilizing STRUCTURE software, a total of four genetic structure groups were detected in the panel germplasm of lines. These structural subgroups exhibited good correlations among their members for iron toxicity tolerance and other yield-related traits. Marker–trait association analysis validated the reported iron toxicity tolerance QTLs qFeTox 4.2 and qFeTox 4.3, which are useful for marker-assisted improvement. A new QTL, qFeTox 7.1, located on chromosome 7, was detected as controlling iron toxicity tolerance in rice.