Iron-based materials showed a high potential for degradable biomaterial applications. However, their slow corrosion rate limits their use as a biodegradable implant material. One approach to control and modify their mechanical properties is the use of reinforcement particles, to create metal matrix composites in which the second phase is aimed at tuning not only the mechanical properties but also the corrosion mode and rate in a physiological environment. Here, Fe/Mg2Si composites were produced via powder metallurgy from pure Fe and Mg2Si powders. The different conditions were fabricated by various combinations of milling or mixing processes followed by hot rolling consolidation. The effect of the Mg2Si addition on corrosion behavior of Fe/Mg2Si composites was studied by performing cyclic polarization and static corrosion tests for an immersion time of 24 and 240 h. The presence of the reinforcement particles played a crucial role in the susceptibility of Fe-based composites to localized corrosion attack. The corrosion initiation and its development were systematically monitored. Scanning electron microscopy, X-ray diffraction, and atomic emission spectroscopy were employed to investigate the corrosion mechanism. The importance of Mg2Si particles in the triggering of corrosion processes was explained. Electrochemical measurements and static immersion tests implied that the introduction of Mg2Si particles could accelerate the corrosion rate of Fe. It was confirmed that the size and distribution of the reinforcement influenced considerably the uniformity of the corrosion attack.