In industrial application, iron chloride is used in sewage treatment and drinking water production. In this application, FeCl3 in slightly basic water reacts with the hydroxide ion to form a floc of iron hydroxide, or more precisely formulated as FeO(OH)-, that can remove suspended materials.

It is also used as a leaching agent in chloride hydrometallurgy,] for example in the production of Si from FeSi. (Silgrain process)

Another important application of iron chloride is etching copper in two-step redox reaction to copper(I) chloride and then to copper chloride in the production of printed circuit boards.