Abstract: A heat treating atmosphere and method for its use wherein the atmosphere provides precise control over carbon content in metal parts, such as steel, and which is particularly applicable to powder metal sintering. The method uses a mixture of resultant constituents from dissociated ammonia and methane combusted with air to provide an atmosphere of controlled carbon potential. The ammonia is dissociated, the methane is combusted with air and the resultant constituents are mixed together prior to introduction into the heat treating furnace. The method prevents the formation of undesirable hard and brittle phases of carbides during sintering, the resulting products being free of segregated high carbon constituents, i.e., cementite, and being easier to machine, thus providing much longer cutting tool life.