The densification and microstructural evolution during co-sintering of M2 tool steel/316L stainless steel composite layers with and without boron addition was studied. A pressureless sintering method in conjunction with a powder layering technique was used to fabricate the stepwise graded composite layers. Isothermal and non-isothermal sintering response of the individual and composite layers was examined and the microstructural features of the bonding zone were studied. Shear strength and microhardness of the bonding zone were also measured. It was shown that an enhanced densification is obtained in the composite layers due to (i) sintering shrinkage incompatibility between two steels, (ii) interlayer diffusion of the alloying elements and formation of a dual delta-ferrite/austenite phase at high temperature, and (iii) formation of a low temperature eutectic Fe (C)-B phase at the interface in the samples containing boron. The morphology of carbides in M2/316L is significantly changed as the sintering temperature increases, i.e., they appeared as fine intergranular carbides at low temperatures (1,240 degrees C), thick film at 1,260 degrees C and herringbone shape eutectic at 1,290 degrees C. Elongated grains with an intergranular boride phase were seen in the bonding zone of M2/316L + B layers. The shear strength of the interface of the composite layers was found to be superior to that of the individual layers.