Atomically dispersed transition metal‐nitrogen‐carbon catalysts are emerging as low‐cost electrocatalysts for the oxygen reduction reaction in fuel cells. However, a cost‐effective and scalable synthesis strategy for these catalysts is still required, as well as a greater understanding of their mechanisms. Herein, iron, nitrogen co‐doped carbon spheres (Fe@NCS) have been prepared via hydrothermal carbonization and high‐temperature post carbonization. It is determined that FeN₄ is the main form of iron existing in the obtained Fe@NCS. Two different precursors containing Fe²⁺ and Fe³⁺ are compared. Both chemical and structural differences have been observed in catalysts starting from Fe²⁺ and Fe³⁺ precursors. Fe²⁺@NCS‐A (starting with Fe²⁺ precursor) shows better catalytic activity for the oxygen reduction reaction. This catalyst is studied in an anion exchange membrane fuel cell. The high open‐circuit voltage demonstrates the potential approach for developing high‐performance, low‐cost fuel cell catalysts.