Nanoscale Ferric Oxide was prepared from natural hematite and characterized. Using it as catalyst, methylene blue-simulated wastewater was treated by photocatalytic degradation with high-voltage mercury lamp and sunlight as excitation light source. Main factors, including the preparation conditions and dosage of ferric oxide, pH value, reaction time and initial concentration of simulated wastewater, and their influence to treatment effect were discussed. Test results showed that at a pulverization time of 1.5h, calcination time of 2h at 500°C, initial methylene blue (MB) concentration of 20mg/L, pH=2 and a ferric oxide dosage of 0.01g/30ml, for both high-voltage mercury lamp and sunlight, MB wastewater was degraded effectively in lab-scale experiment; after 5h’s radiation, MB concentrations were reduced from 20mg/L to 0.51mg/L and 9.18mg/L respectively. With sunlight as the radiation light source, an enlarged experiment was done on a custom-built device, and MB concentration was reduced from 20mg/L to 0.11mg/L, which was significantly better than treatment results from lab-scale experiments and UV radiation. MB photocatatytic degradation reactions at different initial concentrations were in accordance with Lagergren’s pseudo-first-order kinetic equation. Spectral analysis of degradation products showed that MB molecules were degraded to inorganic ions.