Magnetic fraction isolated from steel furnace slag was tested as a component of Cu-free friction composites. The friction–wear performance and production of wear particles during their testing using a pin-on-disc tester against a cast iron disc were evaluated. To compare the effect of the magnetic fraction on the parameters studied, the composite with alumina and the composite with original steel furnace slag were also prepared and tested. All composites showed a comparable friction coefficient. The composite with original steel furnace slag, and the composite with a magnetic fraction showed higher wear resistance compared to the composite containing alumina. The positive effect of the magnetic fraction on the extent of the emission of wear particles was observed and explained by the decreased aggressiveness of this composite to the cast iron disc. The influence of the phase composition of the steel furnace slag and the magnetic fraction on the friction film formation was also indicated, and its effect on the production of wear particles was proposed.