Smelting reduction of iron ore‐coal composite pellets has been carried out in an induction furnace. The pellets, tied with tungsten wire, were immersed into the liquid metal bath. The experiments were carried out in the temperature range of 1713 K to 1733 K. For 16‐18 mm diameter pellets, it was observed that (i) the time required for complete dissolution in liquid metal bath is 83‐90 seconds, (ii) the fraction of reduction for 40 seconds of immersion varied from 0.68‐0.87 for Jharia coal pellets and 0.73‐0.92 for Bhilai coal pellets, and (iii) the fraction of reduction increases with decreasing Fe/C ratio and increasing immersion period. X‐ray diffraction (XRD) of reduced pellets showed that the reduction occurred topochemically. Scanning electron microscopic (SEM) examination of partially reduced pellets evinced the structural changes in pellets. The present investigation aims to assess the effect of Fe/C ratio in pellet, volatile matter in coal, and time of pellet immersion into liquid metal bath on reduction of iron ore‐coal composite pellets.