Nanophase iron (np-Fe) is widely distributed on the surface of lunar soil particles, forming as a result of space weathering. These np-Fe particles contribute to the reddening and darkening of the visible to near-infrared spectra of weathered lunar material and serve as critical indicators for assessing the maturity of lunar soil. (1) This article reviews the proposed formation mechanisms of np-Fe particles from studies of Apollo and Luna soils, including the thermal reduction of iron melts, vapor deposition caused by micrometeorite impacts, and hydrogen reduction due to solar wind exposure. (2) Additionally, recent findings from the analysis of Chang’E-5 lunar soil are highlighted, revealing new mechanisms such as sub-solidus decomposition of olivine, impact-driven disproportionation, and FeO eutectic reactions. (3) Experimental studies simulating space weathering through laser and ion irradiation are also discussed and compared. Despite extensive research, a definitive understanding of np-Fe particle formation remains elusive. Previous lunar soil samples have been collected from the near side of the Moon. This year, the Chang’E-6 mission has successfully returned the first-ever lunar soil samples from the far side. These samples are expected to exhibit unique space weathering characteristics, providing new insights into the formation mechanisms of np-Fe in lunar soil.