Identifying the dynamic structure of heterogeneous catalysts is crucial for the rational design of new ones. In this contribution, the structural evolution of Fe(0) catalysts during CO ₂ hydrogenation to hydrocarbons has been investigated by using several (quasi) in situ techniques. Upon initial reduction, Fe species are carburized to Fe ₃ C and then to Fe ₅ C ₂ . The by-product of CO ₂ hydrogenation, H ₂ O, oxidizes the iron carbide to Fe ₃ O ₄ . The formation of Fe ₃ O ₄ @(Fe ₅ C ₂ +Fe ₃ O ₄ ) core-shell structure was observed at steady state, and the surface composition depends on the balance of oxidation and carburization, where water plays a key role in the oxidation. The performance of CO ₂ hydrogenation was also correlated with the dynamic surface structure. Theoretical calculations and controll experiments reveal the interdependence between the phase transition and reactive environment. We also suggest a practical way to tune the competitive reactions to maintain an Fe ₅ C ₂ -rich surface for a desired C ₂₊ productivity.