A ferromagnetic iron alloy powder for a magnetic recording medium is composed of acicular iron-base particles of an average major axis length (X) of not less than 20 nm and not greater than 80 nm and have oxygen content of not less than 15 wt % and coercive force (Hc) of not less than [0.0036 X3−1.1 X2+110 X−1390 (Oe)] (where X is average major axis length expressed in nm). The ferromagnetic iron alloy powder is obtained by reacting metal powder composed of acicular iron-base particles having an average major axis length of not less than 20 nm and not greater than 80 nm with pure water in substantial absence of oxygen to form a metal oxide film on the particle surfaces. Optionally, the particles can be reacted with a weak oxidizing gas by a wet or dry method.