Large hypervelocity impacts occurred frequently on ancient Mars, leaving many large impact basins visible today. After the planetary dynamo ceased operating, such impacts demagnetized the crust by way of (1) excavation of magnetized material, (2) heating, and (3) shock pressure. We investigate these three demagnetizing processes, both separately and in combination, using hydrocode simulations of large impacts on early Mars at a range of impact energies and using a new parameterization of the shock pressure-demagnetization behavior of candidate Martian minerals. We find that in general, shock pressure demagnetization is more important than thermal demagnetization, except in the combined case of very large impacts (more than ~1026 J) and low Curie temperature minerals such as pyrrhotite. We find that total demagnetized area has a power law dependence on impact energy (with an exponent of 0.6–0.72) and that depending on the magnetic mineral, the demagnetized area resulting for a given impact energy can vary over approximately an order of magnitude. We develop an empirical model that can be used to calculate total demagnetized area for a given impact energy and magnetic mineral (whose pressure-demagnetization properties are known). Once a reliable basin scaling law for ancient Mars (i.e., relating impact energy to final basin topography) is derived, this mineral parameterization and empirical model will allow robust constraints to be placed upon the primary Martian magnetic carrier(s).