In this study, the sphericalurea granulates as space holder were used to manufacturing the steel foams by powder metallurgy technique. In this process, the urea granulates were coated by a mixture of iron, cupper, and carbon powders. After compacting the coated granulates up to 200 MPa through a hydraulic press in a metallic mold, the sintering process was carried out at 1120 ˚C in an especial powder metallurgy furnace. The performed studies on the manufactured specimens were included the measurement of the porosity fraction, microstructural evaluations by optical and scanning electron microscopies, and investigation of compression properties. The mean of the porosity fraction of manufactured specimens was measured 74.5 percent. The optical microscopic evaluations shown that the cells are exactly manufactured according to granulates geometry. In addition, no fracture was observed in the cell walls and in the urea granulates in compacting process. The SEM images shown that the all of cells walls connected to each other and sets of open and close cells were produced. In the compression stress vs. strain curves of manufactured steel foams, along plateau region was observed. The average of stress in the plateau region, maximum compression stress, and absorbed energy were 15 MPa, 25 MPa, and 14 Nm, respectively.