The thermal expansion and the Curie temperature of Gd2Fe16.5Cr0.5 compound have been investigated by means of x-ray diffraction and magnetization measurements. The result shows that the Gd2Fe16.5Cr0.5 compound annealed at 1243°C has a hexagonal Th2Ni17-type structure. Cr atom substituting for Fe atom can increase the Curie temperature obviously. In magnetic state, an anisotropic anomolous thermal expansion was observed. Along the c-axis, the average linear thermal expansion coefficient αc=-2.79×10-6/K in the temperature range 294-472K, and αc =-3.09×10-5/K in 472-592K. Along the a-axis, the average linear thermal expansion coefficient αa =9.22×10-6/K in 294-552K, and αa =-1.41×10-5/K in 552-592K. In the temperature range 472-592K, the average volume thermal expansion coefficient αv =-2.14×10-5/K. The mechanism of the thermal expansion anomaly of Gd2Fe16.5Cr0.5 compound was discussed in this paper.