High-grade hematite mineralization is widely developed in banded iron formations (BIFs) worldwide. However, in the North China craton where Neoarchean-Paleoproterozoic BIFs are abundant, economic high-grade hematite ores are scarce. High-grade hematite ores hosted in the Paleoproterozoic Yuanjiacun BIFs represent the largest occurrence of this type of ore in the North China craton. The orebodies are fault controlled and show sharp contacts with lower greenschist facies metamorphic BIFs. In situ U-Pb geochronology of monazite and xenotime intergrown with microplaty hematite and martite in high-grade ore established two episodes of metamorphic-hydrothermal monazite/xenotime growth after deposition of the BIFs. The earlier episode at ca. 1.94 Ga is interpreted as the timing of lower greenschist-facies metamorphism, and the later episode at 1.41 to 1.34 Ga represents the timing of high-grade hematite mineralization. Petrography and microthermometry of primary fluid inclusion assemblages indicate that the high-grade hematite ore formed from hot (313°–370°C), CO2-rich, and highly saline (~20 wt % NaCl equiv) hydrothermal fluids. These fluids channeled along faults, which concentrated iron through interaction with the BIFs—a process similar to typical hematite mineralization elsewhere. The deposition of hematite was probably related to tectonic extension in the North China craton related to the breakup of the Columbia/Nuna supercontinent. Our results challenge a previously proposed model ascribing the scarcity of high-grade hematite ores in the North China craton to the lack of prolonged weathering conditions. Rather, we argue that the high-grade ore formed in lower metamorphic-grade BIFs at shallower depths than magnetite mineralization and was largely eroded during later exhumation and uplift of the craton.