The present invention relates to a kind of pre-alloyed powder and its application in making diamond tool. The pre-alloyed powder consists of at least two selected from Fe, Co, Cu and Ni as basic components, one or several of Mn, Ti, Sn, Mo, W and WC, and one or two of RE, such as La and Ce. It contains at most 80 % of Fe, at most 40 % of Co, at most 80 % of Cu, at most 40 % of Ni, at most 8 % of M and 0-5 % of RE, where, M is one or several of Mn, Ti, Sn, Mo, W and WC and RE is La and/or Ce. The pre-alloyed powder has also inevitable impurity. Scanning electronic microscope measurement shows that the pre-alloyed powder has basic particle size smaller than 15 micron and oxygen content not more than 2 %. The pre-alloyed powder is used as adhesive in making diamond tool.