Al-MCM-41 and Fe-containing MCM-41 molecular sieves are hydrothermally synthesized. The low-angle XRD analysis shows that iron incorporation in Al-MCM-41 retains the hexagonal structure of MCM-41. The higher d-spacing values of Fe-Al-MCM-41 catalysts than those of Al-MCM-41 indicate the incorporation of iron into the framework. The mesoporous nature of the materials was confirmed by nitrogen adsorption isotherms. Electron paramagnetic resonance (EPR) and diffuse reflectance spectra (DRS) techniques confirm the tetrahedral coordination of iron into the Al-MCM-41 framework. Acidity of the synthesized catalysts was analyzed by both TPD of ammonia and pyridine-adsorbed FT-IR spectroscopy. The acidity measurements indicate that iron incorporation increases both Lewis and Bronsted acidity of the catalysts. Vapor-phase isopropylation of phenol with the new alkylating agent isopropyl acetate was carried over the H-forms of the above catalysts. The phenol to isopropyl acetate ratio of 1 : 2 and the phenol space velocity of 1: 1 h(-1) were found to be the optimum conditions for better phenol conversion and para isomer (4-isopropyl phenol) selectivity. On comparison, the Fe-incorporated Al-MCM-41 catalysts show significantly higher phenol conversion and selectivity toward the important product 4-isopropyl phenol (4-IPP) may be due to stronger Bronsted acid sites generated by the strengthening effect of nearby Lewis acid sites. Further, the undesired and dialkylated products selectivity are found to be lower over Fe-incorporated Al-MCM-41 than pure Al-MCM-41 catalysts.