The body has no special method to get rid of iron. Any excess iron can only be lost by shedding cells that contain the element, such as red cells (in bleeding) and enterocytes (as part of faeces). Iron absorption therefore has to be closely scrutinized, and the chief regulator is a protein produced by the liver, called hepcidin. The 'export proteins' for iron are called ferroproteins, and were known to be present on cells participating in iron metabolism, including enterocytes (where iron is absorbed and some of it stored) and macrophages (which engulf aged red cells and recycle their iron).
Hepcidin binds to and destroys ferroproteins, with the net result that iron is trapped within its storage sites. Under conditions of iron deficiency, therefore, hepcidin is down-regulated, permitting the ferroproteins to rapidly move iron out of the stores to the rest of the body. Conversely, cytokines (like IL-6) produced during inflammation up-regulate hepcidin, sequestering the iron away from microbes (real or imaginary) that the body assumes are causing the inflammatory response. This is one mechanism producing the familiar anaemia of chronic inflammation (ACI).
OK, that's the background; now the new bit. It has long been known that, although characteristic of either condition, the microcytosis of iron deficiency is usually far worse than that of ACI. In fact, in about 70% of ACI cases, there isn't even a microcytosis! This is puzzling, though, since in either case the microcytosis is caused by a deficiency of iron to the developing red cells - there isn't enough iron in the body in the former, and the iron is inaccessible in the latter. Furthermore, the microcytosis might be supposed to be more severe in ACI, since in this condition iron's transport protein, transferrin, is also down-regulated. Yet the opposite pattern occurs. Why?
A recent study by Zhang et al. located ferroproteins on erythroid precursors, a fact that came as a surprise to us all, since these cells would be the one cell type you would least expect to export iron - they're busy stuffing themselves full of iron-containing haemoglobin proteins! It therefore appears that the body sometimes needs to make use of this iron elsewhere in the body, in myoglobin, cytochromes, etc. But now think of the implication: during conditions of iron deficiency, hepcidin levels plummet, allowing the ferroproteins to release iron from the erythroid precursors to be used by the rest of the body. On the other hand, during inflammation, hepcidin production is ramped up, and the iron is trapped within the erythroid precursors, where it can presumably be used to continue red cell production.
At a stroke this solves the puzzle of why the erythrocytes are so much worse off, iron-wise, in iron deficiency, compared to ACI.
Source: Keel, Sioban B., Abkowitz, Janis L.The Microcytic Red Cell and the Anemia of Inflammation
N Engl J Med 2009 361: 1904-1906