Fe-doped CeO2 is synthesized by ceramic method and the effects of Fe doping on the structure and properties are characterized by ordinary methods and terahertz-time domain spectrometer (THz-TDS) technique. Our results show that pure CeO2 only has a small dielectric constant ε of 4, while a small amount of Fe (0.9 at.%) doping into CeO2 promotes densification and induces a large ε of 23. From the THz spectroscopy, it is found that for undoped CeO2 both the power absorption and the index of re[faction increase with frequency, while for Fe-doped CeO2 we measure a remarkable transparency together with a flat index curve. The absorption coefficient of Fe-doped CeO2 at frequency ranging from 0.2 to 1.8 THz is less than 0.35 cm-1, implying that Fe-doped CeO2 is a potential THz optical material.