Identifying the dynamic structure of heterogeneous catalysts is crucial for the rational design of new ones. In this contribution, the structural evolution of Fe(0) catalysts during CO2 hydrogenation to hydrocarbons has been investigated by using several (quasi) in situ techniques. Upon initial reduction, Fe species are carburized to Fe3C and then to Fe5C2. The by-product of CO2 hydrogenation, H2O, oxidizes the iron carbide to Fe3O4. The formation of Fe3O4@(Fe5C2+Fe3O4) core-shell structure was observed at steady state, and the surface composition depends on the balance of oxidation and carburization, where water plays a key role in the oxidation. The performance of CO2 hydrogenation was also correlated with the dynamic surface structure. Theoretical calculations and controll experiments reveal the interdependence between the phase transition and reactive environment. We also suggest a practical way to tune the competitive reactions to maintain an Fe5C2-rich surface for a desired C2+ productivity.