Many patients with heart failure have an iron‐deficient state, which can limit erythropoiesis in erythroid precursors and ATP production in cardiomyocytes. Yet, treatment with sodium–glucose cotransporter 2 (SGLT2) inhibitors produces consistent increases in haemoglobin and haematocrit, even in patients who are iron‐deficient before treatment, and this effect remains unattenuated throughout treatment even though SGLT2 inhibitors further aggravate biomarkers of iron deficiency. Heart failure is often accompanied by systemic inflammation, which activates hepcidin, thus impairing the duodenal absorption of iron and the release of iron from macrophages and hepatocytes, leading to a decline in circulating iron. Inflammation and oxidative stress also promote the synthesis of ferritin and suppress ferritinophagy, thus impairing the release of intracellular iron stores and leading to the depletion of bioreactive cytosolic Fe2+. By alleviating inflammation and oxidative stress, SGLT2 inhibitors down‐regulate hepcidin, upregulate transferrin receptor protein 1 and reduce ferritin; the net result is to increase the levels of cytosolic Fe2+ available to mitochondria, thus enabling the synthesis of heme (in erythroid precursors) and ATP (in cardiomyocytes). The finding that SGLT2 inhibitors can induce erythrocytosis without iron supplementation suggests that the abnormalities in iron diagnostic tests in patients with mild‐to‐moderate heart failure are likely to be functional, rather than absolute, that is, they are related to inflammation‐mediated trapping of iron by hepcidin and ferritin, which is reversed by treatment with SGLT2 inhibitors. An increase in bioreactive cytosolic Fe2+ is also likely to augment mitochondrial production of ATP in cardiomyocytes, thus retarding the progression of heart failure. These effects on iron metabolism are consistent with (i) proteomics analyses of placebo‐controlled trials, which have shown that biomarkers of iron homeostasis represent the most consistent effect of SGLT2 inhibitors; and (ii) statistical mediation analyses, which have reported striking parallelism of the effect of SGLT2 inhibitors to promote erythrocytosis and reduce heart failure events.