Explosion study in an iron powder reduction furnace was performed. Pressurized gaseous hydrogen was used as reductive atmosphere to convert iron powder in the interior of the furnace. Hydrogen was fed to the pre-chamber of the iron powder reduction furnace. The furnace was located inside a brick building. Explosion potential causes were determined by the fault tree technique. The impact effects to people, environment and materials were also analyzed by using Chem-Plus software. The consequences and vulnerability analyzes were performed considering a confined explosion inside the furnace pre-chamber, resulting from formation of a hydrogen cloud within the H2 explosion limits. The vent area criteria recommended by NFPA 68 to confined spaces were employed to the reduction furnace and to the vulnerability calculations; probit equations of the Eisenberg model were used. As results, safety measures to enhance safety on the reduction of iron powder operation inside the furnace installation were recommended.