In a method for producing by a powder-metallurgical method a wear-resistant iron-based sintered alloy, which essentially consists of from 0.3 to 2.5% by weight of C, from 1 to 8% of Cu, from 3 to 14% of at least one element selected from the group consisting of Cr, Mo, W, V, Nb, and Ta, and Fe and the unavoidable impurities in balance, and which has a micro-structure such that a majority of the alloying elements are uniformly dissolved as solutes of the iron matrix and fine Cu phase is uniformly dispersed, a composite powder which consists of iron or iron alloy and Cu which is present mainly on the surface of the composite powder is used in the raw-material powder.