This study was conducted to evaluate the influence of chloride ions (Cl−) on organic contaminants decolorization by the Fe0-activated persulfate process (PS/Fe0), as well as the generation of transformation products. Orange II (OII) was chosen as the target pollution. The results indicated that Cl− influenced the OII decolorization by PS/Fe0 system, resulting in the generation of chlorine-containing by-products. OII containing Cl− solution can be efficiently decolorized by PS/Fe0 process, and the decolorization efficiencies changed depending on Cl− concentration due to the reaction between Cl− and sulfate radicals (SO4–•). The operating cost for 94% color and 64% COD removal of the OII dye was estimated at 0.73 USD/m3. The chlorine-containing by-products, such as chlorobenzene, 3,5-dichloro-benzene-1,2-diol, and 2,3-dichloro-2,3-dihydro-1,4-naphthoquinone, were generated during the reaction. The results further indicated that increasing both PS concentration and temperature enhanced OII decolorization and reduced the generation of chlorine-containing intermediates. The addition of ultrasound can further decrease the generation of chlorine-containing intermediates under high-temperature conditions. The proposed pathways of decolorization of OII containing Cl− also indicated that SO4–• dominated the OII degradation, while the presence of Cl− led to the generation of chlorine-containing intermediates.