Iron oxide is a cost-effective catalyst for the ketonization of carboxylic acid components of bio-oil crude derived from the pyrolysis of lignocellulosic biomass. Fly ash (FA) waste from coal-fired power plants is an abundant source of iron oxide precursors. Here we report the reductive thermal processing of hematite derived from acid-leached fly ash. Annealing of the hydroxide precipitated leachate produces nanoparticulate α-Fe2O3 containing ∼10 wt% metal impurities (principally Al, Mg, Ca and Ti). Subsequent extended (5 h) reduction under H2 at 400 °C generates a Fe@Fe3O4 core-shell structure, and is accompanied by surface segregation of Al, Mg, Ca and Ti as their oxides, a decrease in particle size, and the concomitant formation of surface oxygen vacancies. These physicochemical changes increase the surface area and introduce Brønsted basicity alongside the intrinsic Lewis acidity of the non-stoichiometric magnetite, promoting ketonization through synergistic activation of two acetic acid molecules. The specific activity of the 5 h reduced FA derived catalyst (FA-5 h) was 3.9 mmol·g−1·min−1 at 400 °C, with a corresponding turnover frequency per acid site of 14.3 min−1. In-situ DRIFTS reveals acetic acid dissociatively adsorbs over FA-5 h, adopting a bidentate acetate binding mode identical to that for commercial magnetite, albeit the fly ash derived catalyst stabilises acetate to a higher temperature (∼300 °C) facilitating C-C coupling versus desorption. Successive doping of commercial magnetite by low concentrations of Al, Mg, Ca and Ti, and subsequent reduction, generated a model catalyst whose acid-base properties and ketonization activity reproduced those of FA-5 h. Surface segregated dopants, notably Ti, are largely responsible for the high activity of FA-5 h through the introduction of additional acid and base sites for acetic acid ketonization.