Abstract: A process for producing a frozen fat-free chopped and formed potato product. The process entails peeling potatoes, cutting the peeled potatoes into potato pieces, and blanching the cut pieces. The cut pieces are then partially blended to produce a mixture of potato bits and paste. A hydrocolloid fat substitute, such as a cultured skim milk powder stabilized with additional hydrocolloids, is introduced to the partially blended potato mixture, preferably at a level of 2 to 5% by weight. The potato pieces and hydrocolloid fat substitute are then further blended, and are then extruded into a formed fat substituted potato product. The formed potato product is then dusted with a wheat flour, precaramelized saccharide, annatto, and seasoning powder composition. The dusted formed fat substituted potato product is then prebaked to form a crust on the product, which subsequently may be frozen and packaged for storage, transport and sale.