In this work, powder compaction and solid-state sintering are employed to fabricate iron-based self-lubricating composites containing MoS₂ and graphite. Previous studies have shown that MoS₂ reacts with iron matrices during sintering, making the production of Fe-MoS₂ composites challenging. We hereby demonstrate that a modification in the sintering atmosphere improves the composites' tribological properties due to a synergic effect of retardation of the solid-state reaction and increase of the matrix microhardness related to the nitrogen intake. The composites sintered in a mixed Ar/H₂/N₂ atmosphere exhibited, on average, a lower dry coefficient of friction compared to those sintered in Ar/H₂.