Studies of the oxygen-rich part of the PbO–PbI₂ system revealed existence of a novel Pb₈O₇I₂ which can be prepared via both solid-state and hydrothermal routes. The new compound exhibits a new and complex structure type formed by [Pb₈O₇]²⁺ rod-like chains formed by OPb₄ tetrahedra and OPb₃ pyramids. Pb₈O₇I₂ exhibits high transparency in the 550–2000 ​nm range; experimental and quantum chemical data indicate that it is a semiconductor with E_g ​≈ ​2.6 ​eV consistent with the intense yellow color.