The invention provides a method for smelting iron by directly melting and reducing powdered ore. The method comprises the following steps: mixing iron ore powder, powdered coal and a solvent according to a predetermined ratio, then adding the materials into a reduction furnace, heating and pre-reducing the iron ore powder by using the reduction furnace; finally reducing the pre-reduced furnace materials and separating slag iron of the pre-reduced furnace materials by using an induction furnace, and finally preparing molten iron with predetermined content of components, wherein the reduction furnace is arranged above the induction furnace; a furnace bed of the reduction furnace has a predetermined inclination angle; and by virtue of the predetermined inclination angle, the molten and/or semi-molten furnace materials on the furnace bed can automatically enter the induction furnace under the action of the gravity. According to the method, the technical effects of simplifying the smelting process and reducing the smelting cost can be implemented.