The effect of dehydration temperature on the reduction process of silica-coated hematite was invest-igated The particle shape and magnetic properties of the products reduced from hematite at various conditions and the oxidation resistance of silica-coated iron powder were examined. It was revealed that single phase iron powder obtained over 45$0^{circ}C$ had good magnetic properties. The iron powder manufactured between 45$0^{circ}C$ and 50$0^{circ}C$ displayed the maximum coercive force as a result of maintaining its acicular shaped. However the coercive force of iron powder reduced over 50$0^{circ}C$ was decreased. The oxidation resistance of silica-coated iron powder in air was very good up to 11$0^{circ}C$ and for 12 days.