Warm compaction is a low cost process to make high density and high performance iron base powder metallurgy parts. Based on results obtained from the dynamic compacting curve, ejection force curve, X-ray diffraction, micro-hardness of iron powder, friction condition and lubricant properties, densification mechanism of warm compaction can be drawn. In the initial stage, the rearrangement of powder particles is the main factor. It contributes more in the densification of warm compaction than that in cold compaction. However, in the later stage, the plastic deformation of powder particles is the primary factor. The increase in plasticity at high temperature can harmonize the secondary rearrangement of powder particles. During the compaction, the polymer lubricant has great contribution to the densification of the powder, since it improves the lubricating condition and effectively decreases the friction in the forming process and thus enhances the compact density. The dynamic compacting curve of warm compaction can be divided into three phases. The first is the particle rearrangement dominant phase; the percentage of particle rearrangement in warm compaction is higher than that in cold compaction by 15-31%. The second is the elastic deformation and plastic deformation dominant phase. The third is the plastic deformation dominant phase. The study of the powder densification mechanism can direct engineers in designing and producing warm compaction powders for high density parts.