The suppression of methane and coke formation over Ni-based catalysts for low temperature ethanol steam reforming remains challenging. This paper describes the structural evolution of Fe-modified Ni/MgAl2O4 catalysts and the influence of iron species on methane and coke suppression for low temperature ethanol steam reforming. Ni-Fe alloy catalysts are gradually oxidized by water to generate Ni-rich alloy and γ-Fe2O3 species at steam-to-carbon ratio of 4. The electron transfer from iron to nickel within Ni-Fe alloy weakens the CO adsorption and effectively alleviates the CO/CO2 methanation. The oxidation capacity of γ-Fe2O3 species promotes the transformation of ethoxy to acetate groups to avoid methane formation and the elimination of carbon deposits for anticoking. Ni10Fe10/MgAl2O4 shows a superior performance with a highest H2 yield of 4.6 mol/mol ethanol at 400 °C for 15 h. This research could potentially provide instructions for the design of Ni-based catalysts for low-temperature ethanol steam reforming.