Combining an electrophilic iron complex [Fe(Fpda)(THF)]2 (3) [Fpda=N,N′‐bis(pentafluorophenyl)‐o‐phenylenediamide] with the pre‐activation of α‐alkyl‐substituted α‐diazoesters reagents by LiAl(ORF)4 [ORF=(OC(CF3)3] provides unprecedented access to selective iron‐catalyzed intramolecular functionalization of strong alkyl C(sp3)−H bonds. Reactions occur at 25 °C via α‐alkyl‐metallocarbene intermediates, and with activity/selectivity levels similar to those of rhodium carboxylate catalysts. Mechanistic investigations reveal a crucial role of the lithium cation in the rate‐determining formation of the electrophilic iron‐carbene intermediate, which then proceeds by concerted insertion into the C−H bond.