The synthesis process of grinding compound level diamond by the pure Fe catalyst-graphite system under high temperature and high pressure was reported, and the P-T phase diagram was given. On this basis, the colorless and transparent grinding compound level diamond was synthesized through the adjustment of technical parameters. By controlling the growth speed of recrystallization of graphite and diamond, and the problem of diamond being opaque and presence of inclusions when synthesized by the pure Fe catalyst was solved. According to the analysis of Mmössbauer and Fourier infrared spectroscopy, the inclusions and content of nitrogen element were characterized. Based on clarifying the formation mechanism of inclusions, the solutions to reducing inclusions were achieved. It also demonstrated the reason why the color of diamond synthesized by the pure Fe catalyst turned tinted.