The coal-based direct reduction followed by magnetic separation (CDRMS) is an efficient iron extraction and dephosphorization process, which requires adding additives to improve the phosphorus removal rate. Compared with other additives, sodium carbonate has the advantages of good iron index, high phosphorus removal rate and less environmental pollution. Its role in phosphorus-rich oolitic iron ore (PROIO) where phosphorus exists in the form of apatite has been proved. However, the influence on the phosphorus transformation process in the lattice of iron minerals is not clear. In this paper, the effect of sodium carbonate on phosphorus removal in iron minerals and iron recovery during CDRMS was studied. Compared with not adding chemicals, the addition of sodium carbonate significantly reduced the phosphorus content of direct reduced iron (DRI) from 0.69% to 0.09%. The iron grade increased from 93.28% to 95.08%, and the iron recovery rate rose from 90.61% to 96.48%. The mechanism of sodium carbonate was revealed by using a synchronous thermal analyzer (TG–DSC), X-ray diffractometer (XRD), X-ray photoelectron spectrometer (XPS), scanning electron microscope and energy dispersive spectrometer (SEM–EDS), and vibrating sample magnetometer (VSM). The results show that sodium carbonate reacted with silicon and aluminum components to form nepheline, and the lattice substitution of phosphorus in iron minerals and silicon in nepheline prevents the reduction of phosphorus. In addition, sodium carbonate promotes the reduction of iron minerals, resulting in an increase in the magnetic properties of the reduction products.