The iron oxide mineral magnetite (Fe₃O₄) is produced by various organisms to exploit magnetic and mechanical properties. Magnetotactic bacteria have become one of the best model organisms for studying magnetite biomineralization, as their genomes are sequenced and tools are available for their genetic manipulation. However, the chemical route by which magnetite is formed intracellularly within the so-called magnetosomes has remained a matter of debate. Here we used X-ray absorption spectroscopy at cryogenic temperatures and transmission electron microscopic imaging techniques to chemically characterize and spatially resolve the mechanism of biomineralization in those microorganisms. We show that magnetite forms through phase transformation from a highly disordered phosphate-rich ferric hydroxide phase, consistent with prokaryotic ferritins, via transient nanometric ferric (oxyhydr)oxide intermediates within the magnetosome organelle. This pathway remarkably resembles recent results on synthetic magnetite formation and bears a high similarity to suggested mineralization mechanisms in higher organisms.