Magnetic iron fine-particles were produced by dehydration and reduction of acicular alpha -goethite particles. To discuss the relationship between the particle structure and coercivity of the produced iron fine particles, morphological properties such as size and acicularity during reaction processes were quantitatively measured. The experimental results showed that average particle sizes and aspect ratios of the iron fine particles are reduced by up to 25 and 40% of those of the goethite particles, respectively. The presence of water vapor during the hematite reduction process inhibited the decrease in the aspect ratio, thereby improving the coercivity of the product iron particles. Furthermore, the relationship between the aspect ratio and coercivity of the iron particles can largely be explained by the Jacobs-Bean model.