Co-reduction of a saprolitic laterite and waste Bayer red mud was investigated to prepare ferronickel powder. The synchronous reduction and comprehensive recovery of nickel and iron in the low-grade laterite ores and iron in the red mud were realized. At the red mud dosage of 50 wt%, ferronickel powder with nickel and iron grades of 5.58 wt% and 89.91 wt% was obtained. The corresponding nickel and total iron recoveries were 93.11 wt% and 90.23 wt%, respectively. The red mud enhanced the nickel recovery of the saprolitic laterite ore evidently, attributing to the formation of low-melting anorthite, omphacite, and diopside during co-reduction. This led that NiO in the saprolitic ore was released. Meanwhile, obvious melting phenomenon of the roasting system was appeared, enhancing the growth of the ferronickel particles.