Curie temperatures indicating non-titaniferous magnetite are common in Icelandic basalts of all ages, especially Tertiary ones. Yet, microprobe analyses of such samples have shown high titanium in the magnetite. To resolve this paradox, and the mechanism at work, the magnetic mineral fraction of eight basalt samples with Js-T curves characteristic for pure magnetite was subjected to a multi-disciplinary analysis including Mössbauer spectroscopy and X-ray diffraction. In most of the samples titanium in the magnetite, as analysed with the microprobe, ranged between 16 and 28 wt.%, indicating submicroscopic solvus exsolution in the titanomagnetite, beyond the power of resolution for the microprobe. More unexpectedly in view of the reversible Js-T curves, Mössbauer spectroscopy showed appreciable proportion of maghemite in the magnetic fraction. A three-stage mechanism is proposed for the formation of the mineral assemblages observed: (1) limited high-temperature oxyexsolution; (2) solvus exsolution during low-temperature hydrothermal alteration; and (3) maghemitization of the magnetite. Finally, the maghemite may transform to hematite with time. It is concluded that maghemite is much more common in Icelandic rocks than hitherto believed.