The ~450 m thick banded chert-hematite and dolomite-chert-hematite body within the Neoproterozoic Jacadigo Group, located near Corumbá, Mato Grosso do Sul, Brazil, represents one of the most prominent “Rapitan type” iron formation (IF). New petrographical, whole-rock geochemical mass balance calculations, and oxygen isotope data from the Monjolinho (formerly Santa Cruz) medium-to high-grade (40–64 wt% Fe) hematite iron ore deposit are used to propose a novel diagenetic and supergene Fe-upgrade model. Burial diagenesis in an extensional setting with a differential stress field (vertical σ1 > σ2 ≥ σ3) at up to 6 km depth and temperatures of 71°–173 °C (based on disequilibrium hematite-chert oxygen isotope exchange) led to vertical shortening (D1a and D1b) by rock compaction. Burial diagenesis was accompanied by ubiquitous growth of lepidoblastic-microplaty hematite, parallel S1, and locally granoblastic hematite, as well as anhedral hematite replacing chert and dolomite. Coeval interaction with high volumes of fluids facilitated volume reduction by differential dissolution of chert layers. This post-lithification dissolution-podding mechanism increased the iron content by an average of 11 wt%, relative to the primary layered IF (from 40 to 50 wt% to 50–58 wt% Fe), and is thus one reason for the exceptionally high Fe grade in unweathered IF. The critical setting for this hypogene, dissolution-podding Fe upgrade is the coincidence of extensional (graben) tectonics and associated infiltration of down flowing, Si-undersaturated fluid that most likely had interacted with overlying carbonates of the Corumbá Group. Minor magnetite in thrust faults and specular hematite veinlets in IF formed during regional D2 and/or D3 shortening. From the Palaeogene period onward, reactivation of the graben system, exhumation, and development of the present topography triggered supergene upgrade of the IF (up to 64 wt% Fe). Main ore forming processes within the deep supergene zone (i.e., the uppermost 180 m below the present surface) were dissolution of dolomite and its local replacement by goethite. In contrast, chert mobilisation takes place only in the uppermost 30m thick eluvial and colluvial zones. The results advance the research on iron ore genesis: Late diagenetic, pressure solution driven silica removal triggered by intense hydrothermal fluid flow is a newly described Fe-upgrade mechanism. Such mechanism can be considered as an endmember in the larger group of hydrothermal Fe upgrade models. Furthermore, crucial evidence is provided for differential gangue leaching within the supergene zone, with wide-reaching dolomite dissolution and chert mobilisation restricted to the uppermost weathering crust.