Aqueous (solution) combustion synthesis of iron oxide is investigated using iron(III) nitrate nonahydrate and three model fuels, each containing one specific functional group. The investigated ligands, in order of experimentally determined reactivity, are -NH2 > -OH > -COOH, where only the amino group triggers a vigorous combustion reaction. On the basis of the experimental findings, a reaction mechanism for iron oxide synthesis is proposed. During the first step, nitric acid is released during thermal decomposition of iron(III) nitrate. Subsequently, two reactions occur: nitric acid reacts with the amino group in a fast exothermic redox reaction, and it also decomposes thermally to release oxygen. The latter may react with carbon available in the fuel and thus increase the overall process exothermicity.