The stock of medium-lean oxidized ore in Bayan Obo is huge as well as its degree of oxidation and impurity content are high. Among them, iron and rare earth are the main recovered components. The grade of iron is 28.74%, content of FeO is 1.99% and grade of rare earth is 5.45%. The iron in the ore mainly exists in forms of hematite and limonite and magnetic iron as well as the distribution ratios are 48.54% and 43.84% respectively. The qualified iron concentrate with grade of iron concentrate of 66.07% and gross recovery of iron of 87.47% is obtained by studying the ore properties of medium-lean oxidized ore in Bayan Obo as well as exploring and recycling its iron resource with the process of “preconcentration-hydrogen-based mineral phase transformation-stage grinding-stage magnetic separation”. This method is beneficial to the full utilization of iron resources and improving the utilization rate of mine resources.