With the continuous development of titanium dioxide production using chlorination method in China, the production of Ti-rich materials for chlorination process from Panzhihua-Xichang ilmenite concentrate becomes an inevitable trend. In order to use Panzhihua-Xichang ilmenite that contains a high volume of impurities and is unfit for the electric furnace reduction-upgraded titanium slag process, which is a feasible technical route, the fluidization oxidation roasting-magnetic separation process for upgrading Panzhihua-Xichang ilmenite was studied in this work. The transformation of phase structure during oxidation process, the effects of roasting parameters, and magnetic separation conditions were investigated. Based on the principle that weak oxidation of ilmenite can form a magnetic ilmenite-hematite solid solution, the results of experiments showed that high magnetic ore can be obtained by fluidization oxidation in the temperature range of 650℃ to 750℃, and the concentrate yield of direct magnetic separation is over 70% with magnetic field intensity of 3 500 Gs. Furthermore, the upgraded ore that meet the material requirements for producing upgraded titanium slag(UGS)were obtained by ball-milling and magnetic separation, with a titanium recovery rate of 49.29%. The process could be further improved by optimizing magnetic separation. It is proved that fluidization oxidation-magnetic separation is feasible for upgrading and utilization of Panzhihua-Xichang ilmenite.