The invention belongs to the field of powder metallurgy, and in particular relates to a preparation method of reduced iron powders for powder metallurgy. The preparation method comprises the following steps: (1) crushing metallic iron containing raw materials, and then carrying out wet ore grinding and low intensity magnetic separation sequentially, so as to obtain iron powders subjected to primary impurity removing; (2) decarbonising and roasting the iron powders subjected to primary impurity removing; (3) carrying out mineral separation to the product of the decarbonising and roasting process to remove impurity, washing with acid, filtering, drying and blending, so as to obtain the reduced iron powders for the powder metallurgy. Compared with raw materials including iron scales and high pure iron ore concentrates in the prior art, the raw materials adopted in the method are wide in source and lower in cost. A novel way is provided for preparation of the reduced iron powders for the powder metallurgy.