A chemical reaction mechanism was developed for the formation of iron oxide (Fe2O3) from iron pentacarbonyl (Fe(CO)5) in a low-pressure hydrogen–oxygen flame reactor. In this paper, we describe an extensive approach for the flame-precursor chemistry and the development of a novel model for the formation of Fe2O3 from the gas phase. The detailed reaction mechanism is reduced for the implementation in two-dimensional, reacting flow simulations. The comprehensive simulation approach is completed by a model for the formation and growth of the iron oxide nanoparticles. The exhaustive and compact reaction mechanism is validated using experimental data from iron-atom laser-induced fluorescence imaging. The particle formation and growth model are verified with new measurements from particle mass spectrometry.