Abstract: The Gongchangling iron deposit is a famous diagenetic-metamorphic iron deposit in Liaoning Province. The No.2 mining area contains the largest amounts of high grade magnetite iron ore in China. In order to study the ore material source, metallogenic environment and origin of mineralization, rare earth elements (REEs) and Y of magnetites from the low grade iron ore and the high grade iron ore hosted in six ore bodies were analyzed by Inductively Coupled Plasma-Mass Spectrometry (ICP-MS). The results show very similar characteristics of total contents of REEs and Y for both low grade and high grade iron ores. The total contents of REEs were very low, and Y/Ho ratios were high. After being normalized by Post Archean Australian Shale (PAAS), REEs and Y patterns displayed depletion of light REEs relative to high REEs. Most samples had positive La anomalies. All samples have distinct positive anomalies of Eu and Y. All the evidence suggests that Magnetite was derived from submarine high temperature hydrothermal fluids and sea water in the studied area. The lack of clear negative Ce anomalies in all samples indicates that magnetite was formed in an anoxic ocean, although the Ce/Ce^* ratios were 0.69-0.97. The high grade iron ore has higher concentrations of total REEs and Eu than the low grade iron ore. The upper iron ore body, which hosted high grade iron ore, also had higher anomalies of Eu, which indicates more outstanding characteristic of hydrothermal fluid. It is suggested that the high grade iron ore was formed by hydrothermal activities from low grade iron ore.