High As groundwater is widely distributed all over the world, which has posed a significant health impact on millions of people. Iron isotopes have recently been used to characterize Fe cycling in aqueous environments, but there is no information on Fe isotope characteristics in the groundwater. Since groundwater As behavior is closely associated with Fe cycling in the aquifers, Fe isotope signatures may help to characterize geochemical processes controlling As concentrations of shallow groundwaters. This study provides the first observation of Fe isotope fractionation in high As groundwater and evaluation of Fe cycling and As behaviors in shallow aquifers in terms of Fe isotope signatures. Thirty groundwater samples were taken for chemical and isotopic analysis in the Hetao basin, Inner Mongolia. Thirty-two sediments were sampled as well from shallow aquifers for Fe isotope analysis. Results showed that groundwater was normally enriched in isotopically light Fe with δ⁵⁶Fe values between −3.40‰ and 0.58‰ and median of −1.14‰, while heavier δ⁵⁶Fe values were observed in the sediments (between −1.10‰ and 0.75‰, median +0.36‰). In reducing conditions, groundwaters generally had higher δ⁵⁶Fe values, in comparison with oxic conditions. High As groundwaters, generally occurring in reducing conditions, had high δ⁵⁶Fe values, while low As groundwaters normally had low δ⁵⁶Fe values. Although sediment δ⁵⁶Fe values were generally independent of lithological conditions, a large variation in sediment δ⁵⁶Fe values was observed in the oxidation–reduction transition zone. Three pathways were identified for Fe cycling in shallow groundwater, including dissimilatory reduction of Fe(III) oxides, re-adsorption of Fe(II), and precipitation of pyrite and siderite. Dissimilatory reduction of Fe(III) oxides resulted in light δ⁵⁶Fe values (around −1.0‰) and high As concentration (>50 μg/L) in groundwater in anoxic conditions. Re-adsorption of isotopically heavy Fe(II) produced by microbially mediated reduction of Fe(III) oxides led to further enrichment of isotopically light Fe in groundwater (up to −3.4‰ of δ⁵⁶Fe) in anoxic–suboxic conditions. Arsenic re-adsorption was expected to occur along with Fe(II) re-adsorption, decreasing groundwater As concentrations. In strongly reducing conditions, precipitation of isotopically light Fe-pyrite and/or siderite increased groundwater δ⁵⁶Fe values, reaching +0.58‰ δ⁵⁶Fe, with a subsequent decrease in As concentrations via co-precipitation. The mixed effect of those pathways would regulate As and Fe cycling in most groundwaters.