A theoretical study of optical absorption and emission measurements of Fe²⁺ as a substitutional impurity in InP and GaP is presented. A new interpretation of the low-temperature absorption spectrum is proposed based on a weak Jahn-Teller interaction between the electronic excited states and a local gap mode of ₅ symmetry. The model also includes the crystal potential, hybridization with the orbitals of the ligands of the host crystal, spin-orbit interaction and a weak dynamic Jahn-Teller coupling of the orbital ground state of Fe²⁺ with transverse acoustic phonons of ₃ symmetry. The theoretical model describes with good accuracy the measured positions and relative intensities of the spectral lines. In addition, the mass dependence of the local gap mode of ₅ symmetry reproduces the general features of the fine structures associated with the isotopic shifts of the zero-phonon line and the contribution to the isotopic shifts arising from the difference in zero-point energy between the initial and final states of the transition is evaluated.