To improve the utilization level and energy conversion efficiency of converter flue gas, a novel technology is proposed for the online production of slagging and dephosphorization agent by utilizing the waste heat of converter flue gas. Herein, the effects of Fe‐oxide dust in converter flue gas on the phase composition and microstructure of decomposed product and decomposition degree are investigated by high‐temperature drop tube furnace experiment and thermogravimetric experiment to clarify the influencing mechanism of Fe‐oxide dust on limestone powder decomposition. The results show that Ca2Fe2O5 is formed during limestone decomposition in the flue gas with Fe‐oxide dust, and the increase of Fe‐oxide dust content promotes the decomposition reaction of limestone powder and formation of calcium ferrite. With the Fe‐oxide dust content increasing from 10% to 30%, the decomposition degree increases from 80.1% to 96.2% and the proportion of Ca2Fe2O5 increases from 6.35% to 35.90%. Moreover, FeO in the dust reacts with both CaCO3 and CaO completely to form calcium ferrite with the presence of external oxygen gas in converter flue gas, whereas FeO has no significant effect on the decomposition of CaCO3 in an inert atmosphere and no Ca2Fe2O5 is formed.