The optimal water content added into the iron ore mixtures is of vital importance for improving granulation. A novel conception about moisture capacity of the iron ore, which means the maximum water content holding in the iron ore particles of unit mass, is proposed to develop a simple and accurate method. The related equipment and measuring procedure are also given. Five mixtures are selected for moisture capacity measuring, and the granulation experiments with the laboratory scale equipment are also carried out for the five mixtures with various water levels, and the permeability of the granules are also measured to get the optimal water content for each mixture. Comparing the optimal water content with the moisture capacity finds that the two parameters have a good positive relation, meaning that more water is necessary for the mixture with high moisture capacity to get a good permeability index. The relationship between the permeability index and particle size distribution is also discussed. It is found that the size of the granules increases with the increase of water content and the permeability of the burden first increases and then decreases with the increase of water content.