Reduction roasting‒magnetic separation was adopted to extract iron in red mud containing 47.45% Fe and 11.58% Al2O3. The process mineralogy and phase transformation of red mud during reduction roasting with CaO were studied using advanced mineral identification and characterization system, X-ray diffraction, scanning electron microscope, and energy-dispersive spectrometer. Results show that the main Fe-bearing minerals in red mud are hematite and alumogeothite, with corresponding contents of 47.99% and 37.81%, respectively. After reduction roasting with CaO, red mud is converted into metallic iron and Ca–Al compounds, and the iron grain size increases with roasting temperature. After roasting at 1175 °C for 60 min, the iron grain size reaches 18.85 μm. Under the conditions of grinding size of − 44 μm of 86.57%, and magnetic intensity of 1000 Gs, a concentrate with Fe grade of 90.14% and Fe recovery of 85.68% is obtained. Meanwhile, there are 40.01% of CaO and 23.96% of Al2O3 in magnetic tailing, which can be used as cement raw materials. This study lays the foundation for the resource utilization of red mud.