A first-principles approach is utilized to study the magnetoelectric coupling induced by Fe in two-dimensional BaTiO3(001) ultrathin film. It is observed that the Fe impurity increases the total magnetic moment but suppresses the spontaneous polarization. Furthermore, the total magnetic moment of Fe replacing Ti is influenced by the distance between dopants and decreases with reducing distance. A study of spin-orbit coupling under bi-axial compressive strain shows strong magnetoelectric coupling with Ti substitution and the configuration with neighbouring Fe is more readily adjusted than that with Fe distant from each other. Meanwhile, the replacement of Ba exhibits negligible interaction between spontaneous polarization and magnetic moment. Clearly, our current work may indicate that the careful substitution of Ti with Fe atoms can realize two-dimensional BaTiO3 behaving as a multiferroic material.