Iron ore prospecting work with gravity and magnetic methods is generally very effective, but in the Quaternary cover area ultrabasic rocks would produce gravity and magnetic interference, which often causes the miscarriage of justice. Therefore the key problem in such an area is to distinguish the gravity and magnetic anomalies caused by basic rocks and those casued by iron deposits. With the exploration of the Duhaotuo iron ore deposit in Luannan area as an example and through the processing of magnetic and gravity data, the authors analyzed the basic rock gravity and magnetic anomalies and their masking effects on ore anomalies, and summarized the methods for identifying iron anomalies. Drilling demonstrates that the means put forward by the authors are reliable and applicable, and the results achieved by the authors will be significant for ore-prospecting work in the future.