The effect of Fe addition on the phase transition, the critical temperature and mechanical properties of $YBa_2Cu_3O_7$ superconductor has been studied. With increasing Fe content, tetragonal phase stabilized and the transition from tetragonal to orthorhombic is totally suppressed in specimen containing 3 wt% Fe. The critical temperature slightly decreases by adding Fe up to 3 wt%. Further addition of Fe cames drastic drop of the critical temperature from 89K to 77K. Addition of Fe improves mechanical properties. In case of 3 wt% Fe addition, four point bend strength increases from 68 to 98 MPa and toughness from 1.2 to 1.8 MPa $m^{1/2}$. Such improvement of mechanical properties is believed to result from reduction of anisotropy in thermal expansion coefficient of orthorhombic phase by suppressing tetragonal-to-orthorhombic phase transition, Reduction of microcracks and porosity has been observed in specimens containing Fe.
