An iron-containing yttria-stabilized zirconia (YSZ) or Fe-YSZ was found to be a promising working redox material for the thermochemical two-step water-splitting cycle. The Fe-YSZ was formed by a high-temperature reaction between YSZ doped with more than 8mol%Y2O3 and Fe3O4 supported on the YSZ at 1400°C in an inert atmosphere. The formed Fe-YSZ reacted with steam to generate hydrogen at 1000°C. The oxidized Fe-YSZ was reactivated by a thermal reduction at 1400°C in an inert atmosphere. The alternative O2 and H2 generations in the repeated two-step reactions and the X-ray diffraction and chemical analysis studies on the solid materials indicated that the two-step water splitting was associated with a redox transition between Fe2+–Fe3+ ions in the cubic YSZ lattice.