<p>Deep decarbonization in the steel industry is possible because of the development of the electric arc furnace (EAF) steelmaking process. Regarding this new process, EAF slag recycling is a major concern because of the cost and environmental issues. To address this issue, we proposed an online smelting reduction method for EAF slag to recover iron and improve its grindability and activity using alumina as a novel modifier. The influences of adding Al₂O₃, CaO/SiO₂, and coal/slag on iron recovery and quality, process stability, and slag performance were investigated. We found that Al₂O₃ modification prevents solid precipitation during reduction and maintains the slag structure at a low polymerization degree, thereby increasing iron recovery from 14.5% to 98.2%. This approach is also superior to silica modification for phosphorus concentration control and refractory protection. A low-phosphorus (0.1%) iron was further produced at a sacrifice of 10% iron recovery by reducing the coal-to-slag ratio. Another distinguishing feature of the Al₂O₃ modification for EAF slag is the high fraction of small 2CaO·SiO₂ crystals in the iron-extracted slag. This feature significantly improves the slag's grinding performance and cementitious activity, achieving complete valorization of the EAF slag.</p>