Functionally-graded or composite components have been recognised as having immense potential for many industries. The flexibility of direct metal deposition (DMD) has the potential to expand this to microstructurally graded components, but accurate control of the process is a problem. In this work, the effects of using different powder morphologies as a control mechanism for microstructure and other material properties are investigated experimentally. For the first time, comparison of the characteristics of two different gas-atomised (GA) and water-atomised (WA) materials is undertaken in order to evaluate the significance of the different DMD characteristics originating from the difference in atomisation method. 316L and H13 materials and a 1.2 kW CO2 DMD system are used. Three primary factors for the differences are identified: increased vaporisation of the powder, a hotter melt pool and less powerful outward Marangoni flow when using water-atomised powder. The reasons for these, the influence they have on process characteristics and final material properties, and the circumstances under which they occur are discussed. (c) 2005 Elsevier B.V All rights reserved.