Electrical Discharge Machining (EDM) is a non-conventional machining process used for machining materials that are otherwise difficult to machine by conventional processes. Powder-Mixed EDM is a variant of EDM, in which an additive powder is added to the hydrocarbon dielectric. These suspended powders affect the energy distribution and sparking efficiency, and consequently the surface finish and micro-hardness. The machining operation generates a large amount of heat. Melting and fusion of these suspended powders with carbon from the hydrocarbon dielectric occur due to the heat generated. Under appropriate machining conditions, these materials may be deposited on the machined surface resulting in surface alloying and further increase in micro-hardness. In the present work, improvement in the surface characteristics after machining of AISI high-carbon high-chromium (D3) die steel with manganese powdermixed dielectric has been investigated. Results of the study show a significant improvement in micro-hardness and deterioration of surface finish. Scanning electron microscopy and X-ray diffraction of the machined surface indicates transfer of manganese and carbon in the form of manganese carbide. Quantitative analysis of the chemical composition of the machined surface was carried out on an optical emission spectrometer to verify the result.