Intrinsic defects in graphitic materials, like vacancies and edges, have been expected to possess magnetic states from the many-body interaction of localized electrons. However, charge screening from graphite bulk carriers significantly reduces the localization effect and hinders the observation of those magnetic states. Here, we use an ultra-low-temperature scanning tunneling microscope with a high magnetic field to observe the magnetic states of atomic vacancies in graphite generated by ion sputtering. Scanning tunneling spectroscopy reveals localized states at the vacancies, which exhibit splitting at a certain magnetic field whose separation increases with the field strength. The transition is well described by the “Anderson model,” which describes the emergence of localized magnetic states inside the metallic reservoir through electron–electron interaction. The interaction strength is estimated to be between 1 meV and 3 meV, which is supported by the density functional theory calculation. The observation provides an important foundation for application of intrinsic defects to carbon-based spintronic devices.