The densification mechanism of an Fe-based alloy powder containing tiny oxide particles under the synergic multi-field effect of spark plasma sintering (SPS) was investigated. Metallographic microscopy and scanning electron microscopy were used to observe the morphology of samples sintered at different temperatures, and the temperature distribution in an individual spherical powder particle during sintering was calculated in consideration of the influence of plasma, which was qualified and quantified through the analysis of the U-I curve. The plasma was observed to play a substantial role in activating and heating the samples at the very early stage of sintering, whereas the joule-heat effect played a dominant role during sintering. Moreover, the plasma also facilitated the diffusion and migration of materials for neck formation.