Currently, the majority of copper tailings are not effectively developed. Worldwide, large amounts of copper tailings generated from copper production are continuously dumped, posing a potential environmental threat. Herein, the recovery of iron from copper tailings via low-temperature direct reduction and magnetic separation was conducted; process optimization was carried out, and the corresponding mineralogy was investigated. The reduction time, reduction temperature, reducing agent (coal), calcium chloride additive, grinding time, and magnetic field intensity were examined for process optimization. Mineralogical analyses of the sample, reduced pellets, and magnetic concentrate under various conditions were performed by X-ray diffraction, optical microscopy, and scanning electron microscopy-energy-dispersive X-ray spectrometry to elucidate the iron reduction and growth mechanisms. The results indicated that the optimum parameters of iron recovery include a reduction temperature of 1150°C, a reduction time of 120 min, a coal dosage of 25%, a calcium chloride dosage of 2.5%, a magnetic field intensity of 100 mT, and a grinding time of 1 min. Under these conditions, the iron grade in the magnetic concentrate was greater than 90%, with an iron recovery ratio greater than 95%.