The textile industry spreads globally with the challenges of its wastewater treatment, especially dyes, which are difficult to degrade. To improve coagulation-flocculation process in dye wastewater treatment, an intercalation process was employed to prepare a new efficient coagulant of lithium borohydride-iron oxychloride (LiBH4_FeOCl) in this study. The layered crystal pristine iron oxychloride (FeOCl) material was prepared by chemical gas phase migration. LiBH4 was introduced into the layers of two dimensional (2D) FeOCl nanosheets by a simple method of liquid phase insertion. The samples were characterized by a field emitting scanning electron microscopy (SEM), a rotating anode X-ray powder diffractometer (XRD), etc. The cationic dye was employed as the simulated pollutant. A coagulation and decolorization experimental device was built to study the coagulation performance of the new coagulant LiBH4_FeOCl. It is found that the intercalation modified LiBH4_FeOCl exhibits the characteristics of crystal structure, and the layered structure of FeOCl is preserved. LiBH4_FeOCl, as an insoluble inorganic solid coagulant, performs well for dye pollutants of methyl red, basic yellow 1, methylene blue, rhodamine B, ethyl violet and Janus green B. The reaction rate is significantly 68% higher than the current commercial coagulants of Al2(SO4)3. The mechanism analysis reveals that LiBH4_FeOCl breaks and disperses rapidly in the water environment. Its negatively charged material particles can be electrostatically adsorbed with dye pollutant molecules through electrostatic action. The above collaborative actions of breaking, dispersion and electrostatic adsorption are the main coagulation mechanisms of LiBH4_FeOCl. The solid inorganic coagulant of LiBH4_FeOCl provides a competitive alternative for traditional inorganic salts and organic coagulants.