This paper proposes a valuable method to reuse the iron oxide scale (IOS) often produced in the steel industry as an anode active material in lithium-ion batteries (LIBs). The IOS samples are prepared via quenching of carbon steel and simple oxidation at a high temperature with or without sequential treatment by potassium hydroxide. Morphological and physical characterizations confirm the formation of a lamellar structure of orthorhombic KFeO2 with a high degree of crystallinity in the potassium-added IOSs. Additionally, the potassium addition decreases the particle size of the crystals and increases the d-spacing between crystal layers. Electrochemical performance tests show that the discharge capacities of the IOS samples monotonically increased with increasing number of charge/discharge cycles regardless of the existence of potassium. In addition, the rate of increase is larger in the potassium-added IOS samples containing the lamellar KFeO2 structure. Consequently, after prolonged cycling (more than 500 cycles), the potassium-added IOS sample retains a discharge capacity of 1020 mAh g−1 with good cycling stability, while the IOS quenched sample only exhibits a capacity of 956 mAh g−1. This result is attributed to the unique structure of the KFeO2 crystals formed in the potassium-added IOS particles.