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In this work, the physical properties of nanocrystalline samples of La0.7Sr0.3Mn1−xFexO3 (0.0 ≤ x ≤ 0.20) perovskite manganites synthesized by the reverse micelle (RM) technique were explored in detail. The phase purity, crystal structure, and crystallite size of the samples were determined using X‐ray diffraction (XRD) and Fourier transform infrared (FTIR) spectroscopy. All the samples had rhombohedral crystal structure and crystallite size increased with increase in Fe content in La0.7Sr0.3MnO3. The scanning electron micrographs (SEMs) exhibited smooth surface morphology and nonuniform shape of the particles. The optical properties studied using UV‐visible absorption spectroscopy revealed a decrease in the absorbance and optical band gap with an increase in Fe content in La0.7Sr0.3MnO3 compound. The temperature‐dependent resistivity measurements revealed semiconducting nature of x = 0 and 0.1 samples up to the studied temperature range, while a metal‐to‐insulator transition was observed at higher Fe doping. Magnetic studies revealed weak ferromagnetism in all the samples and a reduction in the maximum magnetization with an increase in Fe content. A close correlation between electrical transport and magnetic properties was observed with the doping of Fe ion in La0.7Sr0.3MnO3 at Mn site. These results advocate strong interactions associated with the double exchange mechanism among Fe3+ and Mn3+ ions. [ABSTRACT FROM AUTHOR]