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Abstract Large impact craters on Earth are associated with prominent magnetic anomalies, residing in magnetite of the shocked target rocks and impactites. Shock experiments on magnetite suggest that up to 90% of magnetic susceptibility is lost at pressures >5 GPa, but can be partially restored by post‐shock thermal annealing. The magnetic property changes are caused by shock induced grain size reduction and fragmentation, as well as domain wall‐pinning at crystal lattice defects. A recent study of granitoids from the peak‐ring of the Chicxulub crater found that annealing may occur naturally, but can also be overprinted by high‐temperature hematite‐to‐magnetite transformation in non‐oxidizing environments. In this study, we isolate the effect of defect annealing and hematite‐to‐magnetite transformation using the evolution of hysteresis, isothermal remanent magnetization components and first order reversal curve (FORC) diagrams at different high‐temperature steps. We used a laboratory‐shocked magnetite‐quartz ore, a non‐shocked naturally oxidized granite, and a naturally shocked and oxidized granite. Our findings suggest that annealing of shock‐induced lattice defects partially restores some pre‐shock magnetic behavior and causes an apparent average bulk‐sample domain state increase. Hematite‐to‐magnetite transformation creates new fine‐grained magnetite that strongly overprints the original signal, and decreases the average bulk‐sample domain state. Where annealing and hematite‐to‐magnetite transformation both occur, the new magnetite masks the annealing‐induced property restoration and apparent domain state modification in the shocked magnetite. As magnetite oxidation is a ubiquitous process in surface rocks, these findings are fundamental to understand hematite‐to‐magnetite transformation as a potential overprint mechanism, and could have broad implications for paleomagnetic interpretations.