PURPOSE: To obtain alloy powder for a permanent magnet having superior magnetic characteristics at a low cost by mixing the oxide of a rare earth metal with a required metal and metallic Ca, heating the mixture, adding the resulting alloy to molten metal, and carrying ot powdering.

CONSTITUTION: When alloy power for a magnet contg. a rate earh metal represented by a formula R2M17 is manufactured, the oxide of a rare earth metal such as Sm2O3 is mixed with a metal M such as Co and metallic Ca in a prescribed ratio, and the oxide is reduced by heating the mixture to form an RM5 alloy. Pellets of the alloy are added to molten metal contg. Fe-Cu-Zr. They are melted, solidified, and pulverized to obtain alloy powder for a permanent magnet having a desired compostion. An R2M17 type magnet contg. a rare earth metal and having superior magnetic characteristics can be manufactured from the alloy powder at a low cost.