The formation of magnetite nanoparticles (Fe3O4-NPs) by electro-oxidation process was studied by in situ and ex situ techniques in chloride electrolytes with and without ethanol. The electrochemical synthesis is characterized by the application of a current disturbance that promotes the oxidation of a low carbon steel electrode in solution to an oxidized state (Fe2+) which is subsequently transformed into magnetite by reactions in solution. The electrochemical synthesis results in a final product of pure and crystalline magnetite nanoparticles (20–40 nm). The presence of ethanol in the electrolyte does not modify the mechanism of magnetite formation but it extends the lifetime of some precursors during electrosynthesis and promotes the formation of low size magnetite nanoparticles. In situ Raman spectroscopy measurements were used in order to identify the precursor species formed prior to the formation of magnetite nanoparticles during the electro-oxidation of the low carbon steel in electrolyte containing chloride and ethanol. It was corroborated that the electrochemical synthesis of magnetite follows the sequence: Fe(OH)2 → GR(Cl−) → γ-FeOOH → Fe3O4, with a redox interaction between Fe(OH)2 and γ-FeOOH precursors.