This paper examines the formation of cementite in reduction of titanomagnetite ore by methane-containing gas. The reduction of titanomagnetite ore (New Zealand ironsand) by hydrogen–methane–argon gas mixtures was investigated from 600 to 1 100°C. Iron oxides were reduced by hydrogen to metallic iron, which was carburised by methane to form cementite. The reduction rate increased with increasing hydrogen content in the reducing gas, while the methane content had no effect on the reduction process. Preoxidation of the titanomagnetite accelerated its reduction. Reduced iron in titanomagnetite was converted to cementite more slowly than in hematite.