Y2O3 is a promising material for use as a tritium permeation barrier (TPB) coating and as dispersed particles in oxide dispersion strengthened steels for experimental fusion reactors. By using first-principles approaches, we found that substituting Fe for Y in Y2O3 is the most energetically favourable under O-deficient and H-rich conditions, leading to easier formation of the nearby O vacancies. These O vacancies serve as effective trapping sites for H atoms with a formation energy of -2.36 eV. The presence of Fe defects also makes it more difficult for H atoms to migrate in Y2O3 from three possible H-related defects. These findings suggest that incorporating Fe into Y2O3 could yield a better TPB and provide insight into the improved H trapping ability of Y2O3 with Fe dopants.