Abstract: The apparent density of molding-grade, water atomized steel powder can be significantly decreased by employing the following prescribed treatment. Coarse particles are removed in order that at least 80% of the initial powders are finer than 80 mesh. The size distribution of the powders is then determined. The powders are then annealed to both reduce the carbon and oxygen contents and soften the particles. The annealed and agglomerated particles are then ground in a disk mill at specified speeds and gap spacings, depending on the size distribution of the initial powders. Apparent densities less than 2.8 gm/cc may be achieved by (a) employing powders with a finer particle size distribution, (b) decreasing the rotational speed of the disks and (c) increasing the mill gap.