The compressibility and forming ability of water-atomized Ni-16Cr-XAl-3Fe (X= 4.5, 9.0, 13.5, 18, wt%) alloy powders were investigated. Results show that the microhardness of the powders increases with the increasing of Al contents, and the compacting behavior of the four kinds of powders is well consisted with Huang Peiyun compacting theory. According to the compacting equations, it is found that serious work-hardening occurs for powders with relatively high Al contents during pressing, and thus the compressibility and forming ability of water-atomized Ni-16Cr-XAl-3Fe powders become poor with the increasing of Al content. Microcracks and delaminations will appear at the corners of compacts. The reason is mainly attributed to the precipitates of intermetallic compounds such as Ni3Al and NiAl.