an iron - based powder composition for powder metallurgy excellent in flowability and compactibility is produced in accordance with a method comprising the steps of : adding to iron - based and alloying powders , for a primary mixing , a surface treatment agent , and in addition , for a secondary mixing , a fatty acid amide and at least one lubricant , wherein the lubricant has a melting point higher than that of the fatty acid amide and can be a thermoplastic resin , a thermoplastic elastomer , and inorganic or organic compounds having a layered crystal structure ; heating and stirring up a mixture after the secondary mixing at a temperature above a melting point of the fatty acid amide to melt the fatty acid amide ; cooling , while mixing , the mixture subjected to the heating and stirring process so that the alloying powder and a lubricant having a melting point higher than the fatty acid amide adhere to a surface of the iron base powder subjected to the surface treatment by an adhesive force of the melt ; and adding at the time of the cooling , for a tertiary mixing , a metallic soap and at least one thermoplastic resin or thermoplastic elastomer powders and inorganic or organic compounds having layered crystal structure . the mixture is heated to about 423k and loaded into a die for compaction .