Cr-substituted and pristine Ba2In2O5·(H2O)x powders were synthesized by solid state reaction. The influence of Cr-substitution on the crystal structure, chemical composition, magnetic and optical properties were investigated. Powder X-ray diffraction (XRD), elemental analysis and TGA-MS reveal that with substitution of In for Cr, the unit cell volume and the unit cell parameter b increase together with the oxygen and hydrogen content. Magnetic property measurements indicate that Ba2In2O5·(H2O)x is diamagnetic in the temperature range of 2 K < T < 300 K becoming ferromagnetic upon Cr-substitution. In the UV–vis spectra of the Cr-substituted sample a distinctive shift of the absorption-edge energy from 430 to 690 nm was observed corresponding to a bandgap narrowing from 2.88 to 1.80 eV. The replacement of tetrahedral InO4 units by octahedral CrO6 units was found to be the main factor for the drastic change of the magnetic and optical properties.