Although steel slag exhibits cementitious properties, the addition of steel slag in cement is still limited due to both the presence of excess iron oxides and instability of free lime and periclase. This paper proposes a method for oxidizing molten slag in air, aiming at extraction of superfluous wustite and stabilization of free lime and periclase. Mineralogical characteristics of raw slag and modified products were examined using X-ray diffraction (XRD), scanning electron microscopy equipped with backscattered electron imaging (SEM-BEI), energy dispersive spectrometry (EDS) and thermogravimetric analysis (TGA) with differential scanning calorimetry (DSC). Thermodynamic calculations were performed to aid to discuss the experimental results. The results indicate that non-magnetic wustite and periclase are transformed into magnetic spinel (magnetite/magnesioferrite) after oxidation. Temperature has a significant effect on the formation of spinel. The mass fraction of free lime decreases from 3.54 wt.% to 0.96 wt.% as a result of the conversion from free lime to calcium ferrite.