The invention relates to a method for extracting indium and preparing iron oxide by slag-free zinc hydrometallurgy of zinc concentrate, which comprises the following steps of: 1, performing fluidized bed roasting, neutral leaching, low acid leaching, purification and electrodeposition on the zinc concentrate to prepare electric zinc; 2, performing high acid leaching, reduction, preneutralization and displacement to remove copper on low acid leaching residue and waste electrolyte after the electrodeposition to prepare the electric zinc; 3, neutralizing the liquid from which the copper is removed to settle the indium; 4, vulcanizing the liquid in which the indium is settled to remove heavy metal and then adding lime milk to neutralize the liquid to obtain deeply purified liquid; 5, settling iron in the deeply purified liquid by a hydrothermal method to obtain hematite powder; and 6, removing impurities from the hematite powder to obtain soft magnetic iron oxide. In the method, the indium is settled by neutralizing and the iron is settled by the hydrothermal method, so that the indium is separated from the iron, the indium is separated from the zinc, the hematite powder is formed, and the requirement of the soft magnetic iron oxide is met through impurity removal treatment. The method has the advantages of simple process, high recovery rate of the indium and the zinc, short flow for separating the iron from the zinc, high purity of the iron, environmental friendliness, suitability for industrial application, and capability of replacing the conventional slag-free zinc hydrometallurgy process for extracting the indium and making effective use of the iron resource in the zinc concentrate in a form of the soft magnetic iron oxide.