Local-probe weak-transverse-field and zero-field mu SR measurements have been employed to investigate magnetic ordering in the new magnetoelectric compound FeTe2O5Br. Below the Neel transition temperature T-N=10.6 K a static local magnetic field starts to develop at the mu(+) sites. Fast mu(+) polarization decay below T-N speaks in favor of a broad distribution of internal magnetic fields, in agreement with the incommensurate magnetic structure suggested by neutron diffraction experiments. Above T-N the presence of short-range order is detected as high as at 2T(N), which suggests only weak interlayer magnetic coupling. On the other hand, strong Fe3+ spin fluctuations likely reflect geometrically frustrated structure of [Fe4O16](20-) spin clusters, which are the main building blocks of the layered FeTe2O5Br structure. (C) 2010 American Institute of Physics. [doi:10.1063/1.3362909]