Abstract: With the development of the steel industry, the use of high-grade and easy-to-handle iron ore is gradually decreasing. At present, the effective utilization of low-grade and refractory iron ore, particularly high-phosphorus oolitic iron ore, has gradually become a research hotspot and a worldwide problem. This type of ore is mainly distributed in the USA, France, Germany, Russia, and China and often has an oolitic structure, where the intercalation relationship between iron minerals and gangue minerals is complicated and the phosphorus content is high. Therefore, this type of ore has not yet been developed and utilized. Studies have shown that the use of coal-based direct reduction–magnetic separation to process high-phosphorus oolitic iron ore is one of the methods to achieve efficient utilization of its iron resources. Researchers have conducted in-depth studies on process optimization, dephosphorization mechanism, and iron and phosphorus reduction kinetics. To determine the parameters for the industrial test of the rotary kiln, based on the best result of the small-scale test, a pilot-scale experiment on iron recovery and dephosphorization from high-phosphorus oolitic iron ore was conducted using coal-based direct reduction, followed by magnetic separation. Results showed that under the optimum conditions, the grade and recovery of iron and phosphorus contents in the powdered reduced iron concentrate were 94.17%, 77.47%, and 0.08%, respectively. Limestone dosage of 28%, anthracite dosage of 16%, reduction temperature of 1300 °C and reduction time of 3 h were recommended as the initial conditions for the industrial test of the rotary kiln. The mechanisms of anthracite were investigated by X-ray diffraction and scanning electron microscopy–energy-dispersive X-ray spectroscopy. The results showed that with the increase in anthracite dosage, the reduction of wustite and pleonaste and the growth of iron particles are promoted, thereby improving the recovery effect of iron. However, a high anthracite dosage enhanced the reducing atmosphere and its ash content consumed limestone, causing phosphorus in iron minerals and apatite to be reduced to elemental phosphorus and iron particles to form the iron–phosphorus alloy.