We found, using polarization microscopy and small-angle X-ray scattering, that for goethite, a low polydispersity suffices to form two separate nematic phases, while previous theory showed that this is only possible for mixtures of particles with extremely different lengths or diameters. Applying a critical magnetic field, which induces some of the goethite nanorods to rotate, leads to sufficient excluded volume between the particles to cause macroscopic phase separation between two orthogonal nematic phases. The larger the polydispersity of the system, the broader the range of field strengths where nematic−nematic phase separation occurs. This is a new phase separation mechanism which is expected to lead to interesting interfacial phenomena.