Phosphorus in steel is known to increase strength and hardness and decrease ductility. Higher phosphorus content (more than 0.05%), however, promotes brittle behavior due to segregation of Fe3P along the grain boundaries which makes further mechanical working of these alloys difficult. In this work, thin sheets of Fe-P alloys (with phosphorus in range of 0.1–0.35%) have been developed through processing by powder metallurgy followed by hot rolling and cold rolling. The effect of phosphorus content and annealing parameters (temperature and time) on microstructure, mechanical properties, formability in biaxial stretching and fracture behavior of the cold rolled and annealed sheets has been studied. A comparison has also been made between the properties of the sheets made through P/M route and the conventional cast route with similar phosphorus content. It has been shown that thin sheets of Fe-P alloys with phosphorous up to 0.35% possessing a good combination of strength and formability can be produced through rolling of billets of these alloys made through powder metallurgy technique without the problem of segregation.