Synthetic diamond particle-reinforced copper-iron composites (SD/Cu-Fe) were produced by the powder metallurgical method for stone cutting applications, and the microstructure, density, compactness, hardness, flexure strength, and wear resistance of the composites were characterized in this work. The results showed that the diamond particles were relatively uniformly distributed in most areas of the copper matrix and the crystal shape of diamond particles were relatively intact in the sintering temperature range from 740 °C to 780 °C. The interfaces between the diamond particles and copper matrix, as well as the interfaces between the copper matrix and iron layer, were well bonded without significant gaps. The physical properties of composites increased first and then decreased with the sintering temperature. When the sintering temperature was 770 °C, the related properties reached the best. Diamond played a key role in improving the properties of the SD/Cu-Fe sandwich composite. This work provides a basis for the research and development of high-performance diamond-reinforced copper-based iron sandwich composites.