Using Ambient Pressure X-ray Photoelectron Spectroscopy (APXPS), this study investigates the reduction behavior of iron oxides in direct reduction (DRI) and blast furnace (BF) pellets. H2, CO, and a H2–CO mixture are used as reducing agents at 650 °C. The investigation aimed to elucidate variations in the rate of reduction over time and under different conditions. Additionally, contour plots are generated to visualize the X-ray photoelectron peak intensity variations as a function of time. Furthermore, phase stability diagrams based on Fe–O–C and Fe–O–H systems are employed to enhance the understanding of reduction behavior. Results revealed that an increased gas flow rate significantly accelerated the reduction rate due to enhanced gas diffusion, while elevated pressure facilitated the reduction of wüstite to metallic iron. Notably, the DRI pellet achieves around 90% metallization degree reduction with hydrogen, but the introduction of carbon monoxide into the reducing gas prevented the reduction of the DRI pellet. In the case of BF pellet reduction, approximately 20% metallization degree is observed using H2–CO (50:50), yet subsequent reoxidation of the reduced iron to wüstite and magnetite occurred. Further investigation identified a significant increase in the partial pressure of H2O and CO2, particularly within the surface porosities, as the underlying cause of this reoxidation phenomenon.