Hägg carbide (χ-Fe5C2) is considered to be the primary active phase for high-temperature iron-based Fischer–Tropsch synthesis (HTFTS). Hägg carbide may be oxidized to magnetite during FTS depending on the chemical potential of oxygen, μO, which may be related to the partial pressure of the oxidizing agents, H2O or CO2. 3Fe5C2 + 26H2O → 5Fe3O4 + 6CO + 26H2, and 3Fe5C2 + 26CO2 → 5Fe3O4 + 32CO. Magnetite is believed to be active for the water–gas shift reaction but inactive for the HTFTS, and thus, its formation could subsequently contribute to the loss in the FT activity. An in situ magnetometer was used to follow the oxidation behavior of Hägg carbide by either H2O or CO2 under realistic high-temperature FT process conditions. Hägg carbide is not magnetic at the high temperature used for the FT process, while magnetite is. Thus, the transformation of Hägg carbide to magnetite can be followed by tracking its magnetization and by employing in situ X-ray diffraction, at relevant conditions. The results indicated that the oxidation of Hägg carbide and the concurrent catalyst deactivation at these conditions are strongly dependent on the H2O levels present in the reactor. No oxidation was observed at CO2 levels up to 8 bar, while in agreement with the thermodynamic calculations conducted in this study, H2O-induced oxidation was observed at 4 bar during 3 to 20 h exposure. It may be speculated that lower H2O levels could also contribute to Hägg carbide oxidation if the exposure times are longer. Magnetite can be transformed back to Hägg carbide upon lowering the H2O partial pressure or if H2O is removed altogether. This fast reversibility in the phase transformation has also been coupled with an activity gain. More importantly, it has been shown that magnetite may not be solely responsible for the water–gas shift activity during the FTS.