Food fortification programs to reduce iron deficiency anemia require bioavailable forms of iron that do not cause adverse organoleptic effects. Rodent studies show that nano-sized ferric phosphate (NP-FePO4) is as bioavailable as ferrous sulfate, but there is controversy over the mechanism of absorption. We undertook in vitro studies to examine this using a Caco-2 cell model and simulated gastrointestinal (GI) digestion. Supernatant iron concentrations increased inversely with pH, and iron uptake into Caco-2 cells was 2-3 fold higher when NP-FePO4 was digested at pH 1 compared to pH 2. The size and distribution of NP-FePO4 particles during GI digestion was examined using transmission electron microscopy. The d50 of the particle distribution was 413 nm. Using disc centrifugal sedimentation, a high degree of agglomeration in NP-FePO4 following simulated GI digestion was observed, with only 20% of the particles ≤1000 nm. In Caco-2 cells, divalent metal transporter-1 (DMT1) and endocytosis inhibitors demonstrated that NP-FePO4 was mainly absorbed via DMT1. Small particles may be absorbed by clathrin-mediated endocytosis and micropinocytosis. These findings should be considered when assessing the potential of iron nanoparticles for food fortification.