Paul Wanless (30) and Mark Rawle (34) had given the home side a 2-0 lead, but Scunthorpe forward Steve Torpey struck twice to level matters before half time.
The visitors held Oxford until the 88th minute when second half substitute Steele struck for his first of the season to settle it at 3-2.
The U's remain in 3rd place due to goal difference but are now level on points and games played with 2nd place Doncaster. Both teams trail leaders Hull City by three points.