Around 50 million tones hematite iron ores with high iron content at a grade of 68% were found in Muko area of Uganda. Currently, the iron and steel making industry in the country has not yet developed to meet the demand to process the natural ores. Based on the analysis of its composition and mechanical properties, I infer that the natural iron lump ores can charge directly into reduction furnace without any prior treatment, so that the cost of whole process without additional enrichment and sintering will be reduced quite much. Also direct reduction iron (DRI) process use natural gases instead of coals which can greatly reduce the environmental pollution and lower the processes cost. If the raw materials that fit for requirements of majority plants, the seller´s market can get greater control over prices, terms due to the easy and cheap processing. All lump ores were from Butare area which is one occurrence of Muko and named sample A in this work. This research aims to use the lowest cost method to reduce Butare area iron ores and find out the optimum parameters on reduction reactions of Butare iron lump ores, such as flow rate, temperature, size of samples. Base on experiments with different designed parameters, Butare iron lump ores successfully reduced by DR furnace and microstructure was found to be an important parameter that strongly influent reduction degree of Butare iron lump ores.