Dynamic changes in structure and morphology during the heating of iron powder to high temperatures have been studied in situ in an environmental scanning electron microscope (ESEM). The results have shown that the presence of lubricants leads to the formation of ferrite needles at about 500 degreesC. At higher temperatures, the recrystallization of alpha-iron, followed by the nucleation and growth of gamma-iron and finally the sintering process leading to the reduction of porosity and grain growth, were continuously monitored. This technique could be useful in the simulation and optimization of powder processes at elevated temperatures.