This study presents the impact of molybdenum (Mo) inclusion on microstructure, mechanical, and machinability behavior of steels manufactured with powder metallurgy (PM) approach. PM steel samples with different molybdenum ratios were pressed at 750-MPa pressing pressure and sintered in the atmosphere-controlled tube furnace at 1400°C for 1 h. While particle size and distribution of phases of PM steels with different molybdenum ratios were determined by optical microscope, mechanical properties were determined by applying tensile test. The results were observed that 3% Mo weight-added steel displayed the maximum yield and tensile strength. In addition, the machinability properties of 3% Mo-added steel, which has the highest yield and tensile strength, were investigated. In this work, we researched the thrust force and surface roughness as machinability output, and drilling parameters on the output were determined by utilizing analysis of variance. Finally, SEM images were taken from the inner surfaces of the machined holes and the fractured surfaces from tensile test, and information about the machinability of this alloy produced with PM was presented. As a result, an increase in yield and tensile strength and a reduction in strain were identified with the increase in Mo content. Moreover, the coated cutting tools are better on the machining output than the uncoated cutting tools in terms of green environment. The most important factors on the Fz and Ra are the coating condition and the feed rate with 56.53% and 43.62% PCR, respectively.