Factors affecting dimensional change stability of sintered compacts during heat treatment have been investigated to improve dimensional precision of case-hardened compacts made from composite-type alloyed steel powders with compositions around 4%Ni-1.5%Cu-0.5%Mo. Dimensional change stability in carburized and quenched compacts is improved by increasing Ni content, since micro-strain distribution becomes more homogeneous. The size distribution of Ni-rich austenite is correlated with dimensional change stability on tempering. Such austenite phases are observed contrast by a special etching technique which enables quantitative measurements of microstructures. A composite-type alloyed steel powder containing 5.57%Ni, 1.51%Cu and 0.50%Mo with finely dispersed Ni on the iron particles provides excellent dimensional stability during the heat treatment process.