The changes of phase composition and structure evolvement of Fe and Si powders with the ratio of 6.5wt%Si to 93.5wt%Fe were mainly studied. It is found that, the local graded structure, Fe-Fe(Si)-Fe3Si-(FeSi)-Si, forms due to the obvious diffusion and the alloying reaction between Fe and Si powders when sintering at 900-975oC. The graded structure, in which the high silicon phase based on Fe-Si alloys is packed by the low silicon solution based on Fe, exhibits a graded concentration of Si distribution. And most of the Fe-containing phase remains a state of lower Si content, less than that of 3wt%Si-Fe alloy, thus provides the good deformation behavior of rolling and cutting for the compacts. Therefore, it is feasible for the high silicon iron sheets to be produced by the powder metallurgy method.