Zero thermal expansion (ZTE) materials with the advantage of an invariable length with varying temperatures are in high demand for modern industry but are relatively rare for metals. Fe-based Laves phases attract significant attention due to the rich and intriguing physical properties resulting from the coupling between crystal, electric, and magnetic structures. In this work, the structural, magnetic transition, thermal expansion, and magnetocaloric effect of single-phase Fe_2-xHf_0.80Nb_0.20 Laves phase alloys were investigated by means of macroscopic magnetic measurements, Mössbauer spectroscopy, and X-ray diffraction at the temperature range of 4.2-400 K. With the introduction of Fe vacancies, the ZTE coefficient of −1.2 ppm/K is smaller than that (1.7 ppm/K) of stoichiometric Fe₂Hf_0.80Nb_0.20 alloy. Meanwhile, the magnetic entropy change experiences an enhancement from 0.39 to 0.50 J/kg K at a magnetic field change of 2 T. These improved properties are attributed to the vacancy-induced coexistence of ferromagnetic and antiferromagnetic phases, as evidenced by variable-temperature X-ray diffraction and Mössbauer spectroscopy. This work unveils a promising avenue for new zero thermal expansion materials by controlling the vacancies at magnetic atom positions in Fe-based Laves phase alloys.