The earlier study of the author shows that chloroform reacts with nitric acid to form chloroformaldehyde. The objective of the present study is to investigate the nature of chemical reaction between chloroformaldehyde and potassium iodide. It is a redox reaction where chloroformaldehydeoxidizes iodide ion in presence of acid to iodine and itself gets converted to 1,2-dichloro glycol. The reaction continues till chloroformaldehyde is available in the mixture. Preliminary studies show that the reaction is slow but it continues steadily as iodine is removed from the mixture. As reaction proceeds, chloroform gets converted to chloroformaldehyde, which ultimately results single aqueous phase. Detailed investigation clearly indicates that iodine is formed during the reaction between chloroformaldehyde and potassium iodide in presence of acid. Furthermore, the product mixture shows positive response to ammonium ceric nitrate test for alcoholic group. The NMR spectrum of the product sample shows a single broad peak presumably due to merging of two peaks.On the basis of experimental studies, a mechanism is proposed to explain the reaction between chloroformaldehyde and potassium iodide. The mechanism shows that iodide ion is oxidized to iodine and chloroformaldehyde is reduced to alcohol, which finally dimerises to 1,2-dichloro glycol.