This is the second in a series of papers in which we analyze spectra of over 400 K and M giants in Baade's Window, including most of the stars with proper motions measured by Spaenhauer et al. [AJ, 103, 297 (1992)]. In our first paper, we measured line-strength indices of Fe, Mg, CN, and H beta and calibrated them on the system of Faber et al. [ApJS, 57, 711 (1985)]. Here, we use the (Fe) index to derive an abundance distribution in [Fe/H] for 322 stars with effective temperatures between 3900 K and 5160 K. Our derived values of [Fe/H] agree well with those measured from high-resolution echelle spectra (e.g., McWilliam & Rich [ApJS, 91, 749 (1994)]) for the small number of stars in common. We find a mean abundance ([Fe/H])=-0.11+/-0.04 for our sample of Baade's Window K giants. More than half the sample lie in the range -0.4<[Fe/H]<+0.3. We estimate line-of-sight distances for individual stars in our sample and confirm that, in Baade's Window, most K giants with V<15.5 are foreground disk stars, but the great majority (more than 80%) with V>16 belong to the bulge. We also compare the metallicities derived from the CN and Mg-2 indices to those from iron. Most of the metal-rich stars in our sample appear to be CN-weak, in contrast to the situation in metal-rich globular clusters and elliptical galaxies. The metal-poor half of our sample ([Fe/H]<0) shows evidence for a mild Mg overenhancement ([Mg/Fe]similar to+0.2); but this is not seen in the mon metal-rich stars ([Fe/H]greater than or equal to 0). The K giants in Baade's Window therefore share some, but not all, of the characteristics of stars in elliptical galaxies as inferred from their integrated light. (C) 1996 American Astronomical Society.