Banded iron formations (BIFs) are iron- and silica-rich chemical sedimentary rocks formed throughout the Archean and Paleoproterozoic Eras. The presence of hematite (Fe2O3) and magnetite (Fe3O4) in BIFs has led to the widespread assumption that Fe(II) oxidation must have occurred in the ancient oceans via either a biological or chemical mechanism. However, it is unclear whether the ferric iron now present in BIF represents the original ferric oxyhydroxide [e.g., ferrihydrite, Fe(OH)3] precipitated in the water column, or if it is the result of later-stage circulation of oxidizing fluids through the sediment pile. In this study, we conducted high-resolution microscopic investigations on BIF from the 2728 Ma Abitibi greenstone belt located in the Superior Province of the Canadian Shield and the 2460 Ma Kuruman Iron Formation in South Africa to ascertain the timing and paragenesis of the hematite. Three types of hematite are identified by high-resolution electron microscopic characterization and selected area electron diffraction: (1) 3–5 nm ultrafine hematite particles in the iron oxide–rich bands (H1); (2) submicrometer subhedral to euhedral hematite crystals randomly distributed in the chert matrix of transitional zones between iron oxide– and chert-rich bands (H2); and (3) needle-like, radial and fibrous hematite that replaced stilpnomelane or carbonates and is distributed along fractures or layer boundaries (H3). We interpret the first two types as primary minerals dehydrated from precursor ferric oxyhydroxides. H1 remains ultrafine in size, while H2 has undergone an Ostwald coarsening process facilitated by internal fluids produced during amorphous silica to quartz transformation. H3 is a later-stage mineral formed by external fluid-mediated replacement of iron silicates or carbonates. These results indicate that a significant fraction of the hematite in the BIF originated from ferric oxyhydroxide precursors. Importantly, this implies that photosynthetic Fe(II) oxidation, by either a direct or indirect biological mechanism, did exist in seawaters from which some BIF material was deposited.