Delafossites are promising candidates for photocatalysis applications because of their chemical stability and absorption in the solar region of the electromagnetic spectrum. For example, CuAlO2 has good chemical stability but has a large indirect bandgap (~3 eV), so that efforts to improve its absorption in the solar region through alloying are investigated. The effect of dilute alloying on the optical absorption of powdered CuAl1-xFexO2 (x = 0.0-1.0) is measured and compared to electronic band structures calculations using a generalized gradient approximation with Hubbard exchange-correlation parameter and spin. A new absorption feature is observed at 1.8 eV for x = 0.01, which redshifts to 1.4 eV for x = 0.10. This feature is associated with transitions from the L-point valence band maximum to the Fe-3d state that appears below the conduction band of the spin-down band structure. The feature increases the optical absorption below the bandgap of pure CuAlO2, making dilute CuAl1-xFexO2 alloys better suited for solar photocatalysis.