Abstract: Based on equations of mass conservation, energy conservation and chemical reaction rates, a mathematical model of direct reduction process of carbon-bearing pellets was developed. The calculated results of mathematical model agree with the experimental results. Numerical simulation results are shown as follows:Furnace temperature is the most important factor affecting on the reduction rate of pellets, so that it is necessary to heat carbon-bearing pellets under high furnace temperature. Either for larger pellets or for smaller pellets high metallization can be obtained when the heating time is long enough, although the reduction rate of larger pellets is lower than of smaller pellets during the beginning period. For realizing higher metallization and faster reduction rate, the pellets should contain sufficient carbon.