Fe/AlOOH gels calcined and reduced at different temperatures have been investigated by a combined use of Mössbauer spectroscopy, x-ray diffraction, and electron microscopy in order to obtain information on the nature of the iron species formed as well as the various reduction processes. Calcination at or below 1070 K mainly gives reducible Fe3+ while calcination at higher temperatures gives substitutional Fe3+ in the form of Al2−xFexO3. The Fe3+ species in the calcined samples are, by and large, present in the form of small superparamagnetic particles. Crystallization of Al2O3 from the gels is catalyzed by Fe2O3 as well as FeAl2O4. Fe (20 wt. %)/AlOOH gels calcined at or below 870 K give FeAl2O4 when reduced in hydrogen at 1070 K or lower and a ferromagnetic Fe0–Al2O3 composite (with the metallic Fe particles >100 Å) when reduced at 1270 K. Samples calcined at 1220 K or higher give the Fe0–Al2O3 composite when reduced in the 870–1270 K range, but a substantial proportion of Fe3+ remains unreduced in the form of Al2−xFexO3, showing thereby the extraordinary stability of substitutional Fe3+ to reduction even at high temperatures. Besides the ferromagnetic Fe0–Al2O3 composite, high-temperature reduction of Al2−xFexO3 yields a small proportion of superparamagnetic Fe0–Al2O3 wherein small metallic particles (<100 Å) are embedded in the ceramic matrix. In order to preferentially obtain the Fe0–Al2O3 composite on reduction, Fe/AIOOH gels should be calcined at low temperatures (∼1100 K); high-temperature calcination results in Al2−xFexO3. Several modes of formation of FeAl2O4 are found possible during reduction of the gels, but a novel one is that involving the reaction, 2Fe3+ + Fe0 → 3Fe2+.