The invention discloses a powder metallurgy component which is compressed by powder materials. The powder materials includes, by weight, 100 parts of iron powder, 1.8-2.2 parts of copper powder, 0.-1.0 part of graphite powder, 2.0-3.0 parts of nickel powder, 0.4-0.8 part of molybdenum powder, 0.5-1.0 part of micro powder wax, and 0.5-1.0 part of calcium fluoride. The invention further disposed a production method of the powder metallurgy component with a through hole. The method includes: well mixing the powder materials, placing the mixed alloy iron-based powder in a die for compressing forming, sintering, mechanically drilling, thermally processing, and surface vibration grinding to obtain the powder metallurgy component. The produced powder metallurgy component is high in precision, strength and hardness, good in wear resistance, widely applicable to manufacturing of various bevel gears, and the like.