Aluminum iodide is widely used as a catalyst in organic synthesis, particularly in reactions involving halogenation and isomerization. It facilitates the addition of halogens to aromatic compounds and enhances reaction rates in Friedel-Crafts alkylation and acylation under mild conditions. Due to its strong Lewis acidity, it activates various substrates in the formation of carbon-carbon bonds. It is also employed in the preparation of other iodine-containing compounds and in the reduction of certain metal salts in specialized chemical processes. Its reactivity makes it valuable in research laboratories for developing new synthetic pathways.