First-principles calculations were performed to study the structural, electronic, and magnetic properties of bcc Fe with C impurities alloyed with 2, 3, and 6at.% of Mn. Our results reveal that both manganese concentration and carbon location with respect to Mn affect the Fe-Mn magnetic interaction. With an increase in Mn concentration in bcc Fe-Mn alloy, the local magnetic moment of manganese changes sharply from - 2 to 1ν B near 3at.% Mn, while carbon stabilizes the local ferromagnetic interaction between the nearest Mn atom and the Fe matrix. We demonstrate that the Mn-C interaction is attractive and promotes carbon trapping with a low energy defect configuration. Our results indicate that the Mn-C binding energy strongly depends on the magnetism and the formation of Mn xC clusters is predicted. © 2011 IOP Publishing Ltd.