The metallurgical industry is a key sector for carbon emissions, and in recent years, there has been widespread attention on the use of biomass resources as a green, renewable, and carbon–neutral energy source material for low carbon ironmaking processes. The waste wood after hydrothermal-pyrolysis carbonization has the characteristics of low content of harmful elements and high content of fixed carbon. In this study, the waste wood after hydrothermal-pyrolysis two-step carbonization treatment was used as a reducing agent for the reduction of iron ore to prepare iron ore powder- green carbon composite briquettes (ICCB) with two carbon–oxygen ratios. The study investigated the effects of reduction behavior and reaction temperature on the reduction performance of the ICCB. The results indicate that with the increase in reaction temperature, the volume of the ICCB gradually contracts, leading to a reduction in mass. The shrinkage rate of the ICCB during self-reduction at 1200℃ is significantly higher than during co-reduction, and the shrinkage effect of the C/O 0.5 ICCB is more pronounced than that of the C/O 0.8 ICCB. Due to the excessive carbon content in the C/O 0.8 ICCB, the carbon cannot be fully consumed during the reaction process, resulting in consistently low compressive strength of the ICCB, with a compressive strength of 12 N after reduction at 1200℃. In contrast, the iron phase in the C/O 0.5 ICCB gradually recrystallizes during the reduction process, ultimately yielding plastic iron briquettes with compressive strengths exceeding 3000 N after different reaction behaviors at 1200℃. In summary, reducing the carbon-to-oxygen ratio and increasing the reaction temperature contribute to the volume contraction and enhanced compressive strength of the ICCB during the reduction process.