In this study Al-(20,30wt%)Si-(3,5,8wt%)Fe alloy powders were manufactured by gas atomization and the characteristics of alloy powders were investigated. In rapidly solidified Al-Si-Fe alloy powders, primary δ phase (Al₄FeSi₂) with 20∼50 ㎛ in size is observed with primary Si. And the matrix of the powders consists of ternary eutectic of α-Al, Si and intermetallic compound. This intermetallic compound is found in the intercellular regions of α-Al in very small alloy powders, too. When Al-Si-Fe alloy powders are heat treated, the metastable δ phase disappears and equilibrium β phase(A1_5FeSi) is formed and residual Si precipitates around intermetallic compound. It is expected that the materials formed of Al-Si-Fe alloy powders will show better wear resistance, heat resistance and mechanical properties than Al-Si binary alloys due to finely distributed primary and eutectic intermetallic compounds.