In this paper, nano-α-Fe2O3 was synthesized by a facile hydrothermal method, and further utilized as heterogeneous Fenton catalysts for the degradation of acid orange 7. The mechanism of nano-α-Fe2O3/H2O2 system was investigated. The structural properties of α-Fe2O3 was characterized by scanning electron microscopy (SEM) and X-ray diffraction (XRD). SEM showed that α-Fe2O3 exhibited a rod-like morphology with a width of 20 nm and a length of 70 nm. To optimize the operating parameters, the effects of initial pH, substrate concentration, H2O2 concentration, catalyst loading, and reaction temperature in the degradation of acid orange 7 were studied. With the optimized experimental conditions (initial pH = 3.0, substrate concentration = 200 mg/L, H2O2 concentration = 1.5%, catalyst loading = 50 mg/L, and reaction temperature = 30 篊), the degradation rate of acid orange 7 and COD were up to 98.74% and 73%, respectively, after 120 min. The cyclic stability of α-Fe2O3 was evaluated. It was confirmed that the α-Fe2O3 exhibited excellent stability. No significant catalyst deactivation was noted in the five successive runs. The concentration of the dissolved iron ions was lower than 0.8 mg/L. The free radicals generated in the system was characterized. Mechanistic studies showed that HO? plays a critical role in this system.