Introduction: A facultative anaerobe bacterium Shewanella xiamenensis CQ-Y1 was isolated from the wastewater of Changqing oilfield in Shaanxi Province of China. Shewanella is the important dissimilatory metal-reducing bacteria. It exhibited a well potential application in biodegradation and bioremediation. Methods: Genome sequencing, assembling and functional annotation were conducted to explore the genome information of CQ-Y1. The effect of temperatures and NaCl concentrations on the CQ-Y1 growth and Fe(III) reduction were investigated by UV visible spectrophotometry, SEM and XRD. Results: Genomic analysis revealed its complete genome was a circular chromosome of 4,710,887 bp with a GC content of 46.50% and 4,110 CDSs genes, 86 tRNAs and 26 rRNAs. It contains genes encoding for Na+/H+ antiporter, K+/Cl− transporter, heat shock protein associated with NaCl and high-temperature resistance. The presence of genes related to flavin, Cytochrome c, siderophore, and other related proteins supported Fe(III) reduction. In addition, CQ-Y1 could survive at 10% NaCl (w/v) and 45°C, and temperature showed more pronounced effects than NaCl concentration on the bacterial growth. The maximum Fe(III) reduction ratio of CQ-Y1 reached 70.1% at 30°C without NaCl, and the reduction reaction remained active at 40°C with 3% NaCl (w/v). NaCl concentration was more effective than temperature on microbial Fe(III) reduction. And the reduction products under high temperature and high NaCl conditions were characterized as Fe3(PO4)2, FeCl2 and Fe(OH)2. Discussion: Accordingly, a Fe(III) reduction mechanism of CQ-Y1 mediated by Cytochrome c and flavin was hypothesised. These findings could provide information for a better understanding of the origin and evolution of genomic and metabolic diversity of S. xiamenensis.