The direct reduction characteristics of iron oxide by cellulose, hemicellulose (it is difficult to prepare; xylan is used in its place in this work), and lignin were determined using X-ray diffraction (XRD), scanning electron microscopy (SEM), and thermogravimetric Fourier transform infrared (TG-FTIR) combined with several other chemical analyses. The reduction of iron oxide by biomass is determined by gas and fixed carbon in biomass. The characteristic temperature of gas-based reduction ranges from 788 to 823 K, while the characteristic temperature of carbon-based reduction ranges between 1085 and 1154 K. Lignin plays a major role in the reduction of iron oxide mainly by its fixed carbon, while cellulose is mainly achieved by reducing the gases that come from its volatile components. The order of carbon reduction ability of the three kinds of biomass components from the strong to weak was lignin > hemicellulose > cellulose. The capacity for lignin was determined to depend on the morphology and quality of the lignin residue. The thin film structures or with higher carbon content in lignin accelerated the reduction reaction. There are two sources of hydrogen involved in the reduction of iron oxides by the three biomass components. Hydrogen from cellulose- and hemicellulose-based reduction of iron oxide is derived from cellulose and hemicellulose through its own pyrolysis, while hydrogen from lignin-based reduction is derived from carbon or carbon monoxide reacting with water.