The customary edged tool for machining is uneconomical for harder and hard to machine materials and furthermore the level of surface finish accomplished is not that great. As of late, a lot of consideration in mechanical engineering has been centered on finishing tasks. Not many investigations have been accounted for till date on the advancement of substitute magnetic abrasive powder (MAP). In this paper, to improve the finishing performance, the abrasive powder were prepared by mechanical alloying of diamond powder and iron (Fe) powder, compacting these with universal testing machine (UTM) and then sintered at different temperature in a sintering machine in an inert gas (H2) atmosphere. These compacts were crushed and sieved to obtain various sizes of MAP. This abrasive powder were micro-structurally examined. The results indicate that the densification increases and porosity decreases with increasing temperature. Moreover, the prepared bonded MAP has potential performance as a new MAP for fine finishing in Magnetic Abrasive Flow Machining (MAFM) process.