The invention discloses a method and a system for making iron by hydrogen plasma smelting reduction. The method comprises the following steps: putting hydrogen and argon mixed gas into a plasma spraying gun, ionizing the hydrogen and argon mixed gas into plasmas under the action of high-frequency voltage and electric arc, and spraying the plasmas from a nozzle, to form high-temperature plasma flame; feeding iron ore powder into the plasma flame area, to smelt the iron ore powder through the high-temperature plasma flame, generating reduction reaction with the hydrogen plasmas to form smelted metal iron, and then performing subsequent processing treatment. The system for making iron by hydrogen plasma smelting reduction comprises a power supply system, a gas supply system, the plasma spraying gun, a powder supply system and a smelting reduction reaction furnace. According to the method and the system, the dependency of the conventional metal iron smelting method on fossil fuel is changed, and pollution of harmful gas produced in a smelting process to the surrounding environment is avoided.