Commonly used magnetic iron oxide (γ-Fe2O3) was examined for the first time as an unconventional catalyst for 5-hydroxymethylfurfural (5-HMF) oxidation to 2,5-diformylfuran (DFF). Fascinatingly, the magnetic support showed remarkable catalytic activity for this conversion, especially in nanoscale size (≤50 nm). The developed mild reagent system consisting of γ-Fe2O3 and molecular O2 in xylene solvent delivered DFF with 94% selectivity and 82% conversion at 135 °C for 12 h. A deep inspection of the mechanistic study through IR and XPS analysis revealed a phase transition (γ-Fe2O3 to Fe3O4) during the reaction, and then its reversal to the parent form after catalyst activation. The loss in crystallinity and increase in the particle size of the catalyst after the reaction were explicitly analysed by XRD and TEM studies, respectively. The excellent activity of the catalyst was even noticed by a recyclability test for six cycles. The method avoided the requirement of high-pressure equipment, costly noble and transition metals, and harsh basic environments.