The diminished carrier mobility in the ground-state of metal oxide photocatalysts is known to depend on polaron formation and hopping. Photo-excited dynamics and short carrier lifetimes, however, are usually associated with trap states. In this presentation, we investigate the role that small polaron formation plays in the ultrafast localization and trapping of photoexcited carriers in hematite (α-Fe₂O₃), potentially bridging these two pictures. Ultrafast transient extreme ultraviolet (XUV) spectroscopy on the Fe M_2,3 edge measures a sub-5 fs shift in charge density from the oxygen to the iron atom following optical excitation. Small polaron localization of the photoexcited electrons begins on a 100 fs time scale, as measured by a splitting of the Fe M_2,3 edge. The subsequent kinetics reproduce the lifetimes typically associated with trap or mid-gap states in hematite. The splitting of the Fe M_2,3 edge, however, only matches predictions of polaron localization, and not the pre-edge absorption or bleach expected for mid-gap trap states. The measured polaron formation efficiency also matches the discrepancy between the incident photoconversion efficiency and the visible light absorption of hematite with varying excitation wavelength. These results suggest that sub-100 fs small polaron formation is responsible for the intrinsic recombination and transport issues that limit hematite’s performance, even when techniques such as nanostructuring or trap-state passivation are employed. The role of small-polaron localization in metal oxide photocatalysts, as well as possible materials routes to overcome this effect, will be discussed.