Lignocellulosic biomass is an attractive feedstock for biochar production owing to its high abundance and renewability. Various modified biochars have been extensively studied for wastewater treatment to improve the physical and chemical properties of lignocellulosic biochar (L-BC). Particularly, Fe-modified L-BCs have garnered attention owing to the abundance and eco-friendliness of Fe and the outstanding ability to remove various organic and inorganic contaminants via adsorption, oxidation, reduction, and catalytic reactions. Different iron species (e.g., Fe(0), Fe (hydr)oxide, Fe sulfide, and Fe-Metal) are formed during the preparation of Fe-L-BCs, which can completely differentiate the physical and chemical properties of BCs. This review discusses the advances in the synthesis of different Fe-L-BCs, specific changes in the physical and chemical properties of Fe-L-BCs upon Fe addition, and their impacts on wastewater treatment. The results of this review can demonstrate the unique advantages and drawbacks of Fe-L-BCs for the removal of different types of pollutants.