Iron and iron oxides have been employed to catalyze supercritical water gasification (SCWG) of lignin, a typical component of pulp and paper mill wastewater. To investigate the effects of different oxidation sates of Fe-based catalysts during SCWG process, all simulations were carried out through ReaxFF molecular dynamics method. During the catalytic SCWG process, the degradation rate of guaiacyl dimer lignin (GDL) molecule was inversely proportional to the valence state of iron, the higher oxidation state of Fe in iron-based catalyst was, the lower the catalytic degradation ability would be, and then GDL molecule underwent a series of reactions, accompanying with the generation of small molecules, among most of them were fuel gas products. In terms of gas products, Fe catalyst had a unique advantage in catalytic hydrogen production. Moreover, it is found that iron with low oxidation state was beneficial to the formation of CO, while iron with high oxidation state was CO2. Our simulation results further revealed the formation mechanisms of CO, CO2 and CH4. Migration of lattice oxygen in iron oxides was also visualized through figure, and spent catalyst showed different sources in the final, demonstrating that SCW participates in the entire reaction providing not only H but also O free radicals.