The lattice location of Fe atoms in Fe-doped LiNbO₃ is determined experimentally employing X-ray standing waves. At a bulk concentration of 7.48*10¹⁸ cm^-3 Fe is found to occupy sites close to the ferroelectric Li position; shifted by 0.18 AA in the direction of the -c axis. Electronic structure calculations confirm this result insofar as computed spectroscopic data are more consistent with the respective experimental values for Fe located in the vicinity of the Li site than for Fe occupying the Nb lattice position.