In this experiment, a pellet preparation method was investigated to study the drying, preheating, and roasting properties of limonitic iron ore from a plant in Yunnan. The aim was to improve the subsequent iron-making process of limonitic iron ore and make it a substitute for sintered ore. This substitution would reduce the amount of blast furnace slag in the iron-making process. Bentonite is commonly used as a primary binder in many pelletizing plant operations. However, its excessive usage leads to a higher risk of slagging and coking in the furnace. In this paper, we aim to decrease the quantity of bentonite added, enhance the iron content in the pellets, and reduce impurities to improve the grade of limonite pellets. The results show that the optimal drying, preheating, and roasting temperatures of limonite pellets are 200 °C, 700 °C, and 1250 °C, respectively, and the optimal roasting time is 20 min, when the diameter of the pellets is 8–13 mm. The compressive strength of limonite pellets with the addition of 1.5% bentonite was the highest, meeting the demands of a general blast furnace, based on which the iron grade of limonite pellet ore was increased by 10.63%.