Chemical-looping process using the Fe-supported CaSO4 composite material as an oxygen carrier presented benefits of the sufficient oxygen transport capacity and the environment friendliness, most importantly, an economic option on balancing conflicts between reactivity and stability of CaSO4. This study explored transformation pathways of the catalytic and stability-promoted CaSO4 reduction using Fe2O3 as a supporting material. Material characterizations involved TGA, TPR, XRD, SEM-EDX, and theoretical calculations involved DFT via Material Studio and thermodynamics via Aspen Plus. The catalysis role of Fe2O3 was confirmed in the acceleration of complete CaSO4 reduction toward CaS. The formation of a new intermediate phase, CaFeSO, obviously inhibited the side reactions of sulfur releasing due to its good thermal stability. Therefore, this new Fe2O3-involving CaSO4 reduction multi-step reaction scheme was overall superior to the regular CaSO4-CaSO3 reaction scheme, which incurred the serious inefficient and instability. The experimental results were also verified by thermodynamic calculations and DFT calculation. The former revealed the thermal-stability of CaFeSO, and the latter revealed significantly better lattice oxygen transfer capacity of CaFeSO than that of either Fe2O3 or CaSO4. The diffusion rate of lattice oxygen was greatly attributed to its O p-bands closer to the Fermi level. Contrastingly, the S p-band in CaFeSO was away from the Fermi level versus S p-band in CaSO3 crossing the Fermi level, implying that the former was more stable to lose the electron. This work finally exhibited insightful understandings on mechanisms of the kinetics-catalytic and stability-promoted role of the introduced Fe2O3 in the CaSO4 oxygen carriers in chemical looping process, presenting a new prospect using CaFeSO material as oxygen carrier.