We have studied in situ the oxidation of ultrathin iron layers and monitored the chemical changes induced by subsequent deposition of Fe metal using hard x-ray absorption spectroscopy. The site sensitivity of the technique allows us to quantify the composition of the layer throughout the oxidation or deposition process. It is found that the thin native oxide incorporates a significant fraction of Fe atoms remaining in a metallic configuration even in the saturated state. Subsequent deposition of Fe leads to a complete reduction of the oxide that adopts an FeO-like structure containing Fe2+ sites only.