This mixed powder for powder metallurgy, the powder having excellent fluidity and minimal graphite powder scattering, can be obtained relatively conveniently by mixing fine graphite having an average grain diameter of 4 [mu]m or less with an iron-based powder. The process is performed without the addition of a binder and while shearing force is applied. It is preferable that the fine graphite have an average grain diameter of 2.4 [mu]m or less and be wet-milled. A portion of the fine graphite is preferably added in place of at least one constituent selected from the group consisting of carbon black, fullerene, carbon compounds carbonized by baking, and graphite having an average grain diameter of 5 [mu]m or more.