Oxidized starch can be efficiently prepared using H2O2 as an oxidant and iron(III) tetrasulfophthalocyanine (FePcS) as a catalyst, with properties in the same range as those for commercial oxidized starches prepared using NaOCl. Herein, we performed an in-depth study on the oxidation of potato starch focusing on the mode of operation of this green catalytic system and its fate as the reaction progresses. At optimum batch reaction conditions (H2O2/FePcS molar ratio of 6000, 50 °C, and pH 10), a high product yield (91 wt %) was obtained with substantial degrees of substitution (DSCOOH of 1.4 and DSCO of 4.1 per 100 AGU) and significantly reduced viscosity (197 mPa·s) by dosing H2O2. Model compound studies showed limited activity of the catalyst for C6 oxidation, indicating that carboxylic acid incorporation likely results from C-C bond cleavage events. The influence of the process conditions on the stability of the FePcS catalyst was studied using UV-vis and Raman spectroscopic techniques, revealing that both increased H2O2 concentration and temperature promote the irreversible degradation of the FePcS catalyst at high pH. The rate and extent of FePcS degradation were found to strongly depend on the initial H2O2 concentration where also the rapid decomposition of H2O2 by FePcS occurs. These results explain why the slow addition of H2O2 in combination with low FePcS catalyst concentration is beneficial for the efficient application in starch oxidation.