High iron impurity has detrimental effects on the castability and tensile properties of recycled aluminium alloys. The present study reports the engineering of intermetallic β-phase present in hypoeutectic cast Al-Si model alloy systems with high Fe content (2wt% Fe) in order to demonstrate the promising recyclability despite having high Fe content. Thermodynamic interplay between Si and Fe concentration on the formation of the β-phase and the solidification behaviour of the hypoeutectic Al-Si alloys has been explored. It has been demonstrated that with suitable heat treatment it is possible to alter the morphology of the β-phase and based on the experimental evidences, for the first time, the mechanism behind the solid-state morphological changes of beta phase has been proposed. Based on the experimental results and thermodynamic calculations it has been suggested that elimination of beta phase by gravitational segregation is more suitable for the near-eutectic 10wt% Si alloy; whereas for 6wt% Si alloy, morphological change of β-phase is recommended. It was also found that morphological change of beta-phase and Si could help recover the strength and ductility in the recycled Al-Si alloys having high Fe content.