A method for producing a magnetic powder comprised chiefly of Fe16N2 comprising providing a starting powder comprising an oxy-hydroxide or oxide of iron and an amount of noble metal. The starting powder is reduced into an iron powder by a dry method using a hydrogen gas; and the iron powder is nitrided into a magnetic powder comprised chiefly of Fe16N2 particles using a nitrogen-containing gas at a temperature not higher than 200° C. The amount of noble metal is such that an amount that the atomic percent ratio of the noble metal content to Fe in the magnetic powder is 0.01-10.