In the present research, the decomposition of CaO was verified by observing the calciothermic reduction of ilmenite powders that were placed near the negative terminal without a direct connection. With the addition of 0–2 mol% CaO in equimolar CaCl2-NaCl molten salt, it was demonstrated that CaO was electrochemically decomposed to calcium metal, and the metallic phase acted as the reductant to further reduce the ilmenite with the formation of intermediates Fe, CaTiO3, Fe2Ti and FeTi. A sustainable reduction of CaTiO3 commenced with greater calcium metal participation, and the calcium metal content was determined using the CaO concentration in the molten salt. The effect of CaO concentration on the direct electrochemical reduction of a bulk ilmenite pellet was studied. The results proved that the dissolved CaO had an appreciable effect on the phase transformation. Upon the addition of 1 mol% CaO into equimolar CaCl2-NaCl molten salt, the deoxidization rate of ilmenite was promoted, leading to the complete production of an FeTi alloy in fine and homogeneous microstructures with a particle size of 2–8 μm. A lower CaO content (0–0.5 mol%) set the oxide ion transfer limit, and a higher content (more than 1.5 mol%) raised the electronic background current, resulting in charge loss and insufficient electricity for the electrochemical reduction of ilmenite.