The nano-sized Fe powders were prepared by plasma arc discharge process using pure Fe rod. The microstructure and the sintering behavior of the prepared nanopowders were evaluated. The prepared Fe nanopowders had nearly spherical shapes and consisted of metallic core and oxide shell structures. The higher volume shrinkage at low sintering temperature was observed due to the reduction of surface oxide. The nanopowders showed 6 times higher densification rate and more significant isotropic shrinkage behavior than those of micron sized Fe powders.