A new molybdenum hybrid-alloyed steel powder has been developed. The powder is based on a molybdenum prealloyed steel powder to which molybdenum powder particles have been diffusion bonded. The sintered compact made of the developed powder has a finer pore structure than that of the conventional molybdenum prealloyed steel powder, because the ferritic iron phase (α-phase) with a high diffusion coefficient is formed in the sintering necks where molybdenum is concentrated resulting in enhanced sintering. The rolling contact fatigue strength of the sintered and carburized compacts made of this powder improved by a factor of 3.6 compared with that of the conventional molybdenum prealloyed steel powder. The improvement in the rolling contact fatigue strength should result from the fine pore structure without coarse pores acting as stress concentration points.