In recent years, metal chip powders obtained from solid-state processes have shown great potential as a sustainable raw material for powder technologies. The material and fragmentation process of the chips has a significant role in the final characteristics of the powder particles, such as size and particle size distribution, shape, surface, and structure, which are essential parameters to consider when converting chips to powder for applications. However, tool steel chips as a powder raw material have not yet been significantly studied. In this study, the steel chips were from machining AISI H13 steel and the milling process used a ball mill, and the challenge was to obtain powder particle sizes of around 20 µm with suitable properties from the application of envisaged material extrusion (MEX). A comparison study with the commercial raw material for MEX, such as powder metal filament extrusion, was performed. This study highlights the behaviors of chip powders during all steps of MEX, namely, feedstock and filament production, 3D object shaping, thermal de-binding, and sintering. A comparison of the mixture based on powder from chips and commercial powders for MEX was performed after evaluating the mixing torque of the powder and the system of binders and additives suitable for the rheological characteristics required for an extrusion mixture, and optimizing the binder removal and the sintering conditions. The 3D objects resulting from chip powders had a refined microstructure, showing an increase of 15% in the microhardness when compared with the those resulting from commercial powders.