Homogeneous microstructures of the PM compacts are difficult to attain when mixed elemental powders are used. This study examined the microstructures of pressed-and-sintered and MIM products that contain Ni and Mo. Ni-rich areas, which were lean in carbon and were soft, were found easily in regular specimens. Gaps or cracks near the Ni-rich or Mo-rich areas were also frequently observed. This problem got worse when Ni and Mo particles were large and were irregular in shape. By using ball milling treatment and ferroalloy powders, the microstructure homogeneity and mechanical properties were improved. The addition of 0.5wt%Cr further improved the distribution of Ni because Cr reduced the repulsion effect between nickel and carbon. With the elimination of Ni-rich areas, more bainites and martensites were formed and mechanical properties were significantly improved.