Gas-based direct reduction and magnetic separation process was applied in treating a high-phosphorus oolitic iron ore, of which phosphorus mainly occured as Fe3PO7 and apatite. The mechanism of CaCO3 was investigated using XRD, SEM-EDS, and mineral phase analysis. Results showed that when no CaCO3 was added, most of the iron minerals were reduced to metallic iron, while Fe3PO7 was reduced to elemental phosphorus and mixed with the metallic iron particles. When a small amount of CaCO3 was added, CaCO3 preferentially reacted with SiO2, Al2O3 and other components, preventing them from reacting with FeO and resulting in the increase of iron recovery. When the amount of CaCO3 reached 25%, apatite was produced from the reaction of CaO and Fe3PO7, which could be later removed by grinding and magnetic separation.