Pellets incorporated with a carbonaceous material of the present invention contain a carbonaceous material and iron ore mainly composed of iron oxide. The maximum fluidity of the carbonaceous material in softening and melting, and the ratio of iron oxide particles of 10 &mgr;m or smaller in the iron ore are within the range above a line which connects in turn points A, B and C shown in FIG. 1, including the line. This permits the production of pellets incorporated with a carbonaceous material having excellent thermal conductivity and high strength. Reduction of the pellets incorporated with a carbonaceous material produces reduced iron having high strength after reduction and a low fines ratio with improved productivity.