While iron carbide catalysts are widely used to produce diverse hydrocarbons during Fisher-Tropsch synthesis, the complexity of the catalyst and reaction makes it very challenging to obtain a deep understanding of the chemical process and to further improve the performance. In this work, we propose a novel mechanism through density functional theory simulations for CO-derived surface C hydrogenation to C2H4 involving previously unexplored surface diffusion of partially hydrogenated intermediates (CH, CHCH), which significantly reduces the effective energy barrier (Ea-eff) of CH2CH2 from 2.89 eV to 2.10 eV. The hydrogenation of CH2CH to C2H4 is the key step of the entire process. Studies on the correlation between the average Bader charge of surface Fe and the Ea-eff of CH4 and CH2CH2 formation indicate that an increase in the positive charge of iron can enhance the activity and selectivity (with reference to CH4) of ethylene formation.