Small polaron formation is known to limit ground-state mobilities in metal oxide photocatalysts. However, the role of small polaron formation in the photoexcited state and how this affects the photoconversion effciency has yet to be determined. Here, transient femtosecond extreme-ultraviolet measurements suggest that small polaron localization is responsible for the ultrafast trapping of photoexcited carriers in haematite (alpha-Fe2O3). Small polaron formation is evidenced by a sub-100 fs splitting of the Fe 3p core orbitals in the Fe M-2,M-3 edge. The small polaron formation kinetics reproduces the triple-exponential relaxation frequently attributed to trap states. However, the measured spectral signature resembles only the spectral predictions of a small polaron and not the pre-edge features expected for mid-gap trap states. The small polaron formation probability, hopping radius and lifetime varies with excitation wavelength, decreasing with increasing energy in the t(2g) conduction band. The excitation-wavelength-dependent localization of carriers by small polaron formation is potentially a limiting factor in haematite's photoconversion effciency.