The sintering of Fe-Cu powder compacts by laser beams was studied to determine densification and microstructural development. The influence of processing variables such as Cu content, laser output power, sintering time, and green density on the densification and Brinell hardness (HB) were analyzed, and several temperature curves measured during laser sintering (LS) were also discussed in this article. After LS, the samples exhibited considerable shrinkage, which was very different from the effects of conventional sintering (CS). The main reasons for shrinkage are the laser's very fast heating rates, short sintering times, and relatively high sintering temperatures. As a consequence, insufficient time is available for Fe particles to diffuse in the solid state to form a rigid skeleton. After formation, the liquid penetrates quickly along boundaries and separates the Fe particles, leading to rapid collapse and particle rearrangement, which finally results in considerable shrinkage. An increased Cu content, laser output power, and sintering time can promote shrinkage and hardness, but compact slumping occurs when the laser power is too high.