This study investigates the removal of aluminum and iron from rare earth element (REE) containing solutions by solvent extraction with saponified naphthenic acid and by hydrolysis-precipitation. The results emphasize both, the preferential application as well as limitations of every method. We find that emulsification occurring during the solvent extraction of aluminum is caused by its slow extraction rate in comparison to the neutralization reaction and by the proximity of the pH value required for aluminum extraction and the pH value at which hydrolysis of aluminum occurs. However, by choosing a long shaking time of at least 4 h, the emulsion recedes. The formation of emulsion can be avoided by strict control of pH value during the extraction. Moreover, the loading capacity of the organic phase with aluminum is limited due to the strong increase in viscosity of the organic phase with increasing aluminum concentration and due to the gel formation. Regarding the extraction of iron, the amount of extracted ions is limited due to the overlap of the pH range required for the extraction with pH range in which sparingly soluble iron oxides/hydroxides are formed. In summary, aluminum and iron can be simultaneously removed from REE-sulfate solution by solvent extraction with saponified naphthenic acid in one extraction stage only from diluted solutions. However, in comparison to the hydrolysis-precipitation method, a higher purity of the solution is achieved. A complete removal of aluminum and iron from concentrated solutions can be achieved in two stages. First, the content of aluminum and iron should be reduced by hydrolysis-precipitation. After that, a high-purity solution can be obtained by subsequent solvent extraction by saponified naphthenic acid.