A new model for describing the compaction process of iron powder was proposed based on the continuum hypothesis and elliptical yield criterion. To simulate the densification behaviour, the constitutive model was implemented in Marc computer program. For the relationship between load and displacement, different models were compared and the influence of the parameters in the constitutive equations was determined by means of simulation and experiments. The density distribution of a balancer was measured and simulated. The results show that the parameter η adopted plays a modification role for the load-displacement curve, and compared with other models the present model fits better with the experimental data in the later stage of the compaction process mainly due to the different parameters A and B. The friction on the contact surface contributes to the inhomogeneous density distribution under large deformation of the workpiece. The comparison between the simulation and experimental data indicates that this model can be used to predict the powder compact process precisely and effectively.