To produce an iron powder which retains magnetic characteristics of electrolytic iron and has suitable shape and a suitable range of particle size for pressure compacting or infection molding.

In this production, electrolytic iron that consists of electrodeposited iron crystals each having a ≥70μm breadth in the cross-section perpendicular to the direction of iron crystal growth, is coarsely crushed and thereafter, the crushed material is pulverized into a powder having spherical shape with a rotary impact mill and then, a fine powder fraction and a coarse powder fraction are removed from the resulting powder by classifying the powder. Subsequently, the resulting electrolytic iron powder is heated to 750 to 1,100°C in a hydrogen gas stream to subject the powder to recrystallization treatment. Thus, strain within the electrolytic iron powder, that is caused in the crushing and pulverizing stages, is relaxed and grain boundaries within the electrolytic iron powder are eliminated, to recover the inherent magnetic characteristics of electrolytic iron.