Fischer–Tropsch synthesis (FTS), which converts CO and H2 into useful hydrocarbon products, has attracted considerable attention as an efficient method to replace crude oil resources. Fe-based catalysts are mainly used in industrial FTS, and Fe7C3 is a common carbide phase in the FTS reaction. However, the intrinsic catalytic properties of Fe7C3 are theoretically unknown. Therefore, as a first attempt to understand the FTS reaction on Fe7C3, direct CO* dissociation on orthorhombic Fe7C3(001) (o-Fe7C3(001)) surfaces was studied using density functional theory (DFT) calculations. The surface energies of 14 terminations of o-Fe7C3(001) were first compared, and the results showed that (001)0.20 was the most thermodynamically stable termination. Furthermore, to understand the effect of the surface C atom coverage on CO* activation, C–O bond dissociation was performed on the o-Fe7C3(001)0.85, (001)0.13, (001)0.20, (001)0.09, and (001)0.99 surfaces, where the surface C atom coverages were 0.00, 0.17, 0.33, 0.33, and 0.60, respectively. The results showed that the CO* activation linearly decreased as the surface C atom coverage increased. Therefore, it can be concluded that the thermodynamic and kinetic selectivity toward direct CO* dissociation increased when the o-Fe7C3(001) surface had more C* vacancies.