Nanoparticle agglomerates of passivated Fe (n-Fe) and Fe0.96Cu0.04 (n-Fe0.96Cu0.04), synthesized through the levitational gas condensation (LGC) process, were compacted and sintered using the conventional powder metallurgy method. The n-Fe0.96Cu0.04 agglomerates produced lower green density than n-Fe, and when compacted under pressure beyond 200 MPa, they underwent lateral cracking during ejection attributed to the presence of a passive oxide layer. Sintering under dynamic hydrogen atmosphere can produce a higher density of compact in n-Fe0.96Cu0.04 in comparison to n-Fe. Both the results of dilatometry and thermogravimetric (TG) measurements of the samples under flowing hydrogen revealed enhancement of the sintering process as soon as the reduction of oxide layers could be accomplished. The shrinkage rate of n-Fe0.96Cu0.04 reached a value three times higher than n-Fe at a low temperature of 723 K (450 °C) during heating. This enhanced shrinkage rate was the manifestation of accumulation of Cu at the surface of the particles. The formation of a thin-surface melted layer enriched with copper during heating to isothermal holding facilitated as a medium of transport for diffusion of the elements. The compacts produced by sintering at 773 K (500 °C), with relative density 82 pct, were found to be unstable and oxidized instantly when exposed to ambient atmosphere. The stable compacts of density more than 92 pct with 300- to 450-nm grain size could only be produced when sintering was carried out at 973 K (700 °C) and beyond. The 0.22 wt pct residual oxygen obtained in the sintered compact is similar to what is used for conventional ferrous powder metallurgy products. © 2018, The Minerals, Metals & Materials Society and ASM International.