A novel low-temperature electrochemical method for rare earth elements (REEs) recovery from spent permanent magnets was investigated at bench scale. First, magnets were completely dissolved in a 2 g sulfuric acid/g magnet powder solution at room temperature. Then, the iron present in the leachate was either oxidized or reduced electrochemically. After that, REEs were separated as double salt precipitates by the addition of sodium sulfate or sodium hydroxide. A sodium sulfate quantity of 5 times the stoichiometric mass amount proved to be adequate for achieving recovery rates of 90−99% for neodymium, praseodymium, and terbium in the acid leachate, while ensuring no iron coprecipitation. Iron speciation (either fully oxidized or fully reduced) was demonstrated to have no apparent effect on REEs recovery. However, 2−7% iron coprecipitation was observed for acid leachate containing fully reduced iron. Finally, iron, the element of higher weight fraction in magnets, was recovered (77.32% in 20 h) in its useful metallic form by a divided electrowinning process at a moderate temperature (70 °C). The purity of the electrodeposited iron layer was determined to be 95.20 ± 3.57%. The novelty of the proposed environmentally friendly method is the recovery of iron in metallic electrolytic form and REEs in sulfate form, avoiding high temperature pyrometallurgical methods (roasting) or the use of additional chemical oxidizers.