Abstract Fe-modified Ni/Al2O3 catalysts with Fe/Ni molar ratios of 0, 0.5, 1 and 2 were prepared to promote the co-production of H2 and carbon nanotubes (CNTs) during steam reforming of toluene as a tar model compound. After the addition of Fe, toluene conversion increased from 55.1% of Ni/Al2O3 to 73.6% of F1N1A (Fe/Ni ratio of 1), and H2 yield over F1N1A reached the maximum of more than 2000 mmol/(g-cata). Multi-walled carbon nanotubes with average diameter of 10–30 nm were generated and follow tip-growth mechanism. Compared with Ni/Al2O3, the addition of Fe remarkably increased the amount and quality of CNTs which had longer length and less tortuosity. These dual promoting effects on H2 and CNTs after the addition of Fe were attributed to the strong interaction between Ni and Fe in Fe-Ni alloy. Fe-Ni alloy had the high activity for the decomposition performance of toluene and H2O to generate more H2 and intermediates for improving the reforming reaction. Meanwhile, the high catalytic decomposition activity supplied more carbon species and the formation of Fe-Ni alloy enhanced the generation of metal carbide for promoting CNTs growth. Besides, the deposition of amorphous carbon was suppressed and the interaction between Ni particle and catalyst support was weakened after the addition of Fe, which kept the activity of catalyst and promoted the tip-growth of CNTs.