Recently, effect of mechanical activation on carbothermic reduction of hematite and production of cementite from mixed iron-graphite has been investigated. Results showed that mechanical activation (with powerful ball milling), in long time, reduced the temperature of reduction reaction and construction of iron carbide occurred in fewer temperature. In this research, the effect of mechanical-thermal activation process on iron carbide formation by carbothermic reduction of hematite was investigated. First of all, mixed powder of graphite-hematite in stoichiometric ratio was used to produce iron carbide. After that hot ball milling (mechanical and thermal activations) of graphite-hematite mixed powder was carried out under argon atmosphere for about three and six hours in three different temperatures consist of 700, 800 and 900°C. The analysis of phase transformation and morphologies of mixed powder was made by X-ray diffraction, scanning electron microscope. The amount of each phase was determined by tests of titration, image analyzer and LECO combustion analysis, thermal analysis (DTA, DSC) and EDS. X-ray results showed that wustite phase was produced by hot ball milling at 700°C for 3 and 6 hours, which explained the reduction of hematite to wustite in the presence of graphite. Iron phase with wustite was made by hot milling at 800°C for 3 hours and increasing the time of hot ball milling to six hours created iron carbide and iron phases. Hot ball milling at 900°Cdecreased duration of iron and iron carbide from 6 to 3 hours. SEM images and EDS analysis of 800 and 900°C samples indicated the presence of perlite, proeutectoid iron carbide phase and graphite and ferrite (at 900°C) in the microstructure. Increasing the time of hot ball milling at 900°C raised the decomposition of iron carbide to ferrite and graphite. In the next step of assessment, with increasing the amount of graphite in double stoichiometric ratio in mixed powder, effect of hot ball milling process on carbothermic reduction of hematite and making of iron carbide at 900°C for 1.5, 3 and 6 hours was considered. Adding the amount of graphite in mixed powder amplified carbon content in these samples. Due to the more stability of iron carbide at 800°C, cycles with different time and temperature in hot ball milling (800°C and then 450°C) increased carbon content, in comparison with the same cycle at 900°C and 450°C. Mentioned results proved that the role of solid-solid reaction in simultaneous mechanical and thermal activations process override mechanical activation and therefore in the shorter time of hot ball milling, the rate of reduction reactions increased. Keywords: Iron carbide, Mechanical-thermal activation, Hot ball milling, Carbothermic reduction, Hematite, Graphite