With the shortage of high-grade iron ore resources, there is an increasing demand to utilize low-grade iron ores. However, the utilization of refractory low-grade iron ore resources has always been a challenge for the metallurgical industry. In this paper, a novel and green metallurgical technique of highly efficient iron recovery from refractory low-grade iron ores was proposed. A pilot-scale rotary kiln (φ1.5 m × 15 m) research study proved that products with a metallization ratio of 85.15% can be obtained by this low-temperature but rapid reduction process as ore−coal composite was roasted within temperature zone (1173−1264 K) for 24−32 min. Then, 91.75% of iron can be recycled in the form of iron powder (iron grade reached 93.10%), followed by a grinding−magnetic separation process. Compared to the existing processes, this novel process presents advantages of efficient reduction (only 24−32 min for high temperature reduction) and eco-friendliness (energy consumption: 8.98 GJ/t-DRI; CO 2 emission: 800−1100 kg/t-DRI), showing a broad range of application prospects in the resource development and utilization of the same type. To understand this process in depth, in situ dissection research for the pilot-scale rotary kiln reduction process was performed, investigating the temperature field distribution, the iron and silicon minerals transition, and the iron grains formation and growth. A link between materials conversion and external field condition during the rotary kiln reduction course was established, providing technical support for further optimization of this process.