The removal of hematite-based filter cakes is essential to restore formation permeability after drilling operations. Although this process is commonly achieved using acidic systems, these fluids can induce secondary formation damage when interacting with carbonate formations. This study investigates the mechanisms and extent of such damage during the removal of hematite filter cakes using an acidic reducing system composed of hydrochloric acid (6 wt%) and ferrous chloride (10 wt%) under flowback and squeeze operational scenarios in carbonate formations. The experimental program was designed in two main phases to simulate field-relevant conditions and capture both the chemical and petrophysical aspects of secondary formation damage. In the first phase, hematite-saturated FeCl2–HCl solutions were reacted with calcite powder to simulate fluid invasion into carbonate formations and to evaluate precipitation behavior and mineral type during acid neutralization. In the second phase, core-flooding experiments were performed using a modified setup on Indiana limestone plugs to assess the resulting damage under dynamic flow conditions. The workflow incorporated in-situ filter-cake buildup using a hematite-weighted drilling fluid, followed by treatment with the FeCl2–HCl removal solution. Each core was characterized before and after treatment using computed tomography (CT) imaging, resistivity profiling, ultrasonic velocity measurements, and thin-section petrography. These integrated techniques enabled a comprehensive evaluation of secondary formation damage through the following indexes of permeability alteration, damage depth, and mechanical property changes under the two operational scenarios. The obtained results indicated that although the FeCl2–HCl system effectively dissolved hematite, its interaction with carbonate minerals led to secondary precipitation of iron-bearing phases. XRD and SEM analyses confirmed the formation of siderite (FeCO3) and magnetite (Fe3O4) as the dominant precipitates. Under the squeeze scenario, these iron-rich solids penetrated deeper into the carbonate matrix, causing almost 60% reduction in permeability and a marked increase in rock stiffness. In contrast, the flowback scenario confined precipitation to the near-wellbore region, limiting deep invasion and enabling partial restoration of permeability at the core face. This study demonstrates that acidic reducing systems, while effective for hematite dissolution, can induce significant secondary formation damage in carbonates due to redox-driven iron precipitation. The findings highlight the need to optimize acid formulations and operational strategies to preserve formation integrity during filter cake removal.