Magnetocrystalline anisotropy is a crucial parameter that determines the suitability of magnetic material in a wide range of emerging applications. The law‐of‐approach‐to‐saturation (LAS), utilized to obtain the magnetocrystalline anisotropy from hysteresis loops, is not satisfactory for materials with cubic anisotropy as they are two orders higher than the bulk value. Herein, a modified formulation to LAS is presented, where the reduction in effective magnetic anisotropy (K) values due to Fe oxide phases in Fe particles over wide size ranges is accounted. The value of K decreases from 4.2 × 104 J m−3 for the Fe particles of average size 210 nm to 1.2 × 104 J m−3 for the 20 nm particles due to the increase in the iron oxide fraction with size reduction. The effective magnetic anisotropy obtained from the modified LAS has been validated from the ferromagnetic resonance studies for particles of the smallest size.