PURPOSE: To obtain an alloy powder for a permanent magnet having superior magnetic characteristics at a low cost by mixing metallic powder manufactured from a molten mother alloy with the oxide of a rare earth metal and metallic Ca, heating the mixture to reduce the oxide, and powdering the mixture.

CONSTITUTION: When alloy powder for a magnet contg. a rare earth metal represented by a formula R2M17 is manufactured, a mother alloy contg. a metal M such as Co, Fe, Cu or Zr is melted and powdered by cetrifugal spraying or other method. The resulting mother alloy powder is mixed with powder of the oxide of a rare earth metal such as Sm2O3 and metallic Ca powder in a prescribed ratio, the mixture is heated to reduce the oxide, and the mixture is powdered to obtain alloy powder. 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.