By the full-potential linearized augmented plane wave method (FP-LAPW), we investigate the electronic structures and optical properties of Fe-doped SnO2 system, including the density of states (DOS), band structure, dielectric function and other optical spectra. The calculation indicates that the Fe doped materials are all direct transition semiconductors with half-metallic property. With the increase of Fe-doping concentration, the Fermi level goes into valence band gradually, and the band gap reduces with the coupling of Fe atoms increasing. Moreover, impurity can change the property of the bond formation to some extent, and make it have metallic bond characteristic. Furthermore, we find that the optical spectrum (such as absorption spectrum), extinction coefficient, etc are blue shifted, corresponding to the imaginary part of dielectric function. The peaks are related to the transition of electrons, which indicates internal relationship between the electronic structures and optical properties theoretically.