Polycrystalline iron thin films on ion-etched monocrystalline In0.5Ga0.5As/InP (001) substrates were prepared using ion-beam sputtering deposition. The interface reaction was characterised by X-ray diffraction and conversion electron Mössbauer spectroscopy experiments, after annealing in vacuum for 1 h at temperatures between 350 and 450 °C. Interdiffusion phenomena mainly result in the formation of five new phases, namely metallic-In, InAs, Fe2As, Fe2InxAs$_{1-x}$ ($0 \leq x \leq 0.2$) and Fe3Ga$_{2-x}$Asx ($x = 0.2 - 0.3$), in agreement with the predictions of the phase diagrams. InAs results from the decomposition of the semiconductor substrate and remains (001)-textured. The iron-arsenide grains grow into the substrate below the Fe/In0.5Ga0.5As interface. The In precipitates reach ~40 nm in size after 1 h annealing at 450 °C, while the Fe3Ga$_{2-x}$Asx phase appears at 400–450 °C with an either textured or disordered structure. Finally, the overall activation energy for the thermal reaction is calculated to be 1.5 eV in the latter temperature range.