To provide a sintered low alloy steel having accurately controlled carbon content and its preferred production.

A green compact is heated to 300-1000°C in an Ar atmosphere and held for a time sufficient to cause reaction, C+2[O]→CO2, by which oxygen is previously removed thoroughly. Then, in the state of Ar atmosphere, the temp. is lowered down to 300-600°C at which reaction, C+2H2→CH4 takes place. While holding the green compact a 300-600°C, the atmosphere is substituted by (Ar+50%H2) atmosphere and the green compact is held in this state for required time to undergo the latter reaction, by which carbon in iron powder is removed. While the green compact is held at 300-600°C the atmosphere is substituted again by the Ar atmosphere, and the temp. is raised up to a sintering temp. to sinter the green compact. Because oxygen is substantially removed previously, carbon in the carbide remaining by reaction, C+[O]→CO is not removed at this time.