Abstract In conventional metallurgy, chromium is commonly used as an alloying element. It is a ferrite stabilizer and a carbide former, and it also improves hardenability [1]. However, its use has so far been rather limited within the powder metallurgy (PM). This element has high oxygen affinity and tends to form thermodynamically stable oxides. Oxides present on the powder particles play an important role in the sintering process since they may inhibit the formation of metallic bonding between the particles. Consequently, the mechanical properties of sintered compounds are affected. For sintering of steels alloyed elements with high oxygen affinity protective atmosphere of special compositions is required. It was established [2, 3] that oxide reduction during sintering of Cr alloyed steels is the result of combined action of admixed carbon and the oxygen potential of sintering atmosphere. The present article deals with reduction of oxides particles of pre-alloyed water atomized powder Astaloy CrL with the nominal composition of Fe - 1.5wt%Cr - 0.2wt %Mo. According to Mitchell [3] theoretical thermodynamic calculation of required atmosphere composition during the sintering of Fe-Cr-C system in nitrogen/hydrogen atmosphere was carried out, paying special attention to carbothermal reduction process. The reduction of oxide with and without admixed graphite addition was studied after sintering at 1120?C and 1200°C. The morphology, distribution and composition of oxide of powder particles as a received powder as well as powder particles after sintering in atmosphere of 10%H2/90%N2 has been studied on cross sections of particles under the LOM, SEM and EDX analyses.