A method of reduction of metal oxide-bearing green pellets for a reducing furnace characterized by pelletizing a feed powder comprised of a metal oxide-bearing powder and a carbon-bearing powder, including 20 to 80 wt % of powder particles having a size of not more than 10 μm, to make green pellets, screening the green pellets by a screen to remove undersized and oversized green pellets, reducing the moisture content by a pellet dryer, then charging the green pellets into a rotary hearth reducing furnace and reducing by firing the green pellets while continuously conveying green pellets between unit operations.