A series of precipitated Fe2O3/MgO catalysts incorporated with the copper promoter were prepared by the combination of coprecipitation and incipient witness impregnation methods. The catalysts were characterized by N-2-adsorptiondesorption isotherms, X-ray diffraction (XRD), H-2 temperature-programmed reduction (H-2-TPR), CO temperature-programmed desorption (CO-TPD), O-2 temperature-programmed oxidation (O-2-TPO), laser Raman spectroscopy (LRS), and X-ray absorption near edge structure (XANES). The FischerTropsch (FT) synthesis reaction of the catalysts was also performed in a fixed bed reactor using different H-2/CO ratios (H-2/CO = 1 or 2). The characterization results indicated that Mg increases the BET surface area of precipitated oxide precursors by inhibiting sintering during thermal treatment, and leads to the formation of the relatively smaller iron crystallite size. Cu increases the rate of Fe2O3 reduction by providing H2 dissociation sites. The content of iron carbide phases during TPR process in the synthesis gas increases with the increase of copper content and reaches a maximum for the Cu/Fe atom ratio of 0.02. The optimal catalyst with Cu/Fe = 0.02 has high activity. A maximum in the catalytic activity and methane selectivity was obtained for the synthesis gas ratio of 2 (H-2/CO = 2).