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Leady oxide samples with various Fe contents were recovered from simulated spent lead paste with the addition of various dosages of iron oxides as simulated Fe impurities via hydrometallurgical process with sodium citrate-acetic acid solution. More than 75 wt% of the Fe element in simulated spent lead paste remained in the recovered leady oxide. The recovered leady oxide samples were used to prepare positive plates in order to illuminate the effect of Fe impurities on the phase composition of positive material. When the Fe content in recovered leady oxide was > 223 mg kg−1, the generation of 4PbOPbSO4 (4BS) during curing procedure was inhibited. The specific surface area, α-PbO2 content, and hydrated PbO2 content of positive active mass (PAM) after formation procedure decreased with the increase of Fe content. As a result, larger PbSO4 crystals formed in Fe-containing PAMs after cell discharge, which hindered the transfer of H2SO4 electrolyte and destroyed the interconnected PbO2 skeleton. The negative effect of Fe impurities on cell cycle performance was observed when the PAM was manufactured from the leady oxide containing only 49 mg kg−1 Fe element, with the cell capacity decreased from 2.2 to 1.0 Ah after only 230 charge-discharge cycles.