Multiferroic YMn1-xFexO3(020) (x = 0.125, 0.25, 0.50) epitaxial thin films with an orthorhombic structure (space group Pbnm) were prepared on a YAlO3(010) substrate by pulsed-laser deposition. Upon Fe substitution, the b-axis was clearly shortened, whereas the a- and c-axes were slightly lengthened based on XRD analysis. To understand the influence of orbital polarization and the Jahn-Teller effect of Mn(3+) on Fe substitution and also the local octahedral-site distortion of Fe(3+) in an environment of Jahn-Teller-active Mn(3+) ions in YMn1-xFexO3 films, we measured the polarization-dependent X-ray absorption spectra at the Mn-L2,3 and Fe-L2,3 edges, and also simulated the experimental spectra using configuration-interaction multiplet calculations. Although Δeg for the Mn(3+) ion decreased from 0.9 eV in pure YMnO3 to 0.6 eV in the half-Fe-substituted sample, a single eg electron was still strongly constrained to the d3y(2)-r(2) orbital for all the Fe concentrations tested. The largest Δeg, 0.5 eV, for the Fe(3+) ion was derived for a sample with 12.5% Fe substitution, and gradually decreased to 0.15 eV for the half-Fe-substituted sample. The local octahedral-site distortion of the Fe(3+) ion inside the YMnO3 lattice was similar to that of the Mn(3+) ion, whereas the Jahn-Teller distortion and GdFeO3-type distortion of the Mn(3+) ion were decreased by the spherical high-spin Fe(3+) ions. The combination of the experimental and theoretical data provides both profound insight into the variation of the Jahn-Teller distortion and orbital anisotropy and instructive information about the magnetic structures in these orthorhombic YMn1-xFexO3 thin films.