A novel two-stage method for the granulation of fine powders has been developed. The first stage involves air compaction of the powder by drawing atmospheric air into a vacuum-tight vessel containing the powder. The second stage involves air size-reduction of the compacted powder by first compressing the air within the vessel, then liberating the pressurized air very rapidly into the atmosphere. Two powders, superfine silica anhydride (mean diameter 12 nm) and diatomaceous earth (mean diameter 8.3 mm), were successfully granulated. The size distribution of the granule was determined by image analysis. A stepwise multiple regression analysis indicated that the granule size of superfine silica anhydride tends to increase with increasing initial gauge air pressure for compaction, but is rather insensitive to the initial gauge air pressure for size reduction. The opposite trend was observed in the case of diatomaceous earth. The present granulation method is applicable to powders whose bulk volume can be reduced by more than 40% in the first stage of this method.