A single-step pyrometallurgical process for the synthesis of sponge iron is presented in this study. It aimed to investigate the reduction behavior of Fe2O3 in undiluted CH4 flow to establish the process parameters for sponge Fe formation. Thermodynamic analysis predicted the reduction of Fe2O3 to Fe by CH4 at 1000-1200 K. The experiments were carried out at 800-1200 K for 60 min and at 1200 K for 0-60 min. Mass measurement and x-ray diffraction (XRD), and scanning electron microscope techniques were used to characterize the products. The extent of the oxide reduction was found to increase with the temperature and time. XRD showed that single phase Fe was obtained at 1100 K for 60 min and at 1200 K within 10 min. The products synthesized at 1200 K within 15 min had spongy morphology. C deposition on the pre-reduced Fe particles resulted in the disappearance of spongy character.