We investigated that the effect of based compound on machinability of two types of PM steels. One is a copper steel which is selected as a general PM steel, and the other is a diffusion alloyed steel selected as a high strength PM steel. It is found that based compound addition improves machinability in drilling of both of the PM steels. Although the compound addition degrades the mechanical properties of PM steels, it is considered that decrease of the properties can be compensated by increasing density.