The steel industry represents about 7% of the world’s anthropogenic CO₂ emissions due to the high use of fossil fuels. The CO₂-lean direct reduction of iron ore with hydrogen is considered to offer a high potential to reduce CO₂ emissions, and this direct reduction of Fe₂O₃ powder is investigated in this research. The H₂ reduction reaction kinetics and fluidization characteristics of fine and cohesive Fe₂O₃ particles were examined in a vibrated fluidized bed reactor. A smooth bubbling fluidization was achieved. An increase in external force due to vibration slightly increased the pressure drop. The minimum fluidization velocity was nearly independent of the operating temperature. The yield of the direct H₂-driven reduction was examined and found to exceed 90%, with a maximum of 98% under the vibration of ~47 Hz with an amplitude of 0.6 mm, and operating temperatures close to 500 °C. Towards the future of direct steel ore reduction, cheap and “green” hydrogen sources need to be developed. H₂ can be formed through various techniques with the catalytic decomposition of NH₃ (and CH₄), methanol and ethanol offering an important potential towards production cost, yield and environmental CO₂ emission reductions.