A Fe-16Cr-2.5Mo (wt%) damping alloy was prepared by spark plasma sintering (referred to SPS alloy) and vacuum induction melting followed by forging and annealing (referred to VIMFA alloy). The comparative study on microstructure, magnetic performance, damping capacity and mechanical property of SPS and VIMFA alloys was conducted. Results show that the relatively high compactness of SPS alloy is obtained. The dissolution of Cr and Mo in α-Fe solid solution is obviously promoted and the homogeneity of microstructure of SPS alloy is dramatically ameliorated with increase in sintering temperature and extension in holding time. SPS alloys exhibit relatively lower saturation magnetization but higher coercivity than VIMFA ones. There is still favorable damping capacity for SPS alloys despite it is lower than that of VIMFA one. Furthermore, the damping capacity of SPS alloy slightly rises with increase in sintering temperature and extension in holding time. The SPS alloys possess evidently higher compression strength than VIMFA ones. Also, the compression strength of SPS alloy rises with increase in sintering temperature.