An ultrasonic welding tool fabricated of powder metal material includes a body and a welding tip extending axially from the body to a working end. The powder metal material can be ferrous-based and admixed with additives, such as alumina, carbide, ferro-molybdenum, ferro-nickel, chrome or tribaloy. An exposed surface of the welding tip can comprise Fe3O4 oxides. The tool is compacted to the desired shape and sintered. The body can include a different second material compacted separately from the welding tip and then joined to the tip and sintered.