CoCr 2 O 4 has attracted significant attention recently due to several interesting properties such as magnetostriction, magnetoelectricity etc. More recent experiments on Fe substituted CoCr 2 O 4 observed a variety of novel phenomena such as the magnetic compensation accompanied by the occurrence of exchange bias, which reverses its sign. Understanding of such phenomena may lead to control the properties of these material in an efficient way to enhance its potential for multifunctional applications. In this paper, we study the fundamental understanding of Fe doping in modifying the structural and magnetic properties of CoCr 2 O 4 with varying composition and substitution of Fe at different sublattices by first-principles density functional calculations. We have analysed in detail the effect of Fe substitution on crystal field and exchange splittings, magnetic moments and interatomic exchange parameters. It is also observed that with increasing concentration of Fe impurity, the system has a tendency towards forming an'inverse spinel'structure as observed in experiments. Such tendencies are crucial to understand this system as it would lead to modifications in the magnetic exchange interactions associated with sites with different symmetry finally affecting the magnetic structure and the multiferrocity in turn.