Abstract: A method of producing parts from powdered metal having a first step of providing a powder, which is compressed at a pressure of 25 to 65 tsi to provide a green compact. The compact is then sintered at 2000° F. to 2400° F. for 20 to 60 minutes and cooled. After the compact has been cooled, the density of the compact is increased to greater than 7.4 g/cc. The compact is austenitized in an atmosphere of gas containing propane and a carbon potential of 0.8%. In one embodiment, the gas also contains ammonia. The compact is heated in the atmosphere at a temperature of 1600° F. for 40 minutes. Immediately following the heating, the compact is quenched in oil a temperature between 120° F. and 150° F. for 10 to 15 minutes. Lastly the compact is tempered at a temperature between 300° F. and 1000° F. for 30 to 90 minutes.