This is the second in a series of papers in which we analyze spectra of over 400 K and M giants in Baade's Window, including most of the stars with proper motions measured by Spaenhauer et al. [AJ, 103, 297 (1992)]. In our first paper, we measured line--strength indices of Fe, Mg, CN and H$\beta$ and calibrated them on the system of Faber et al. [ApJS, 57, 711 (1985)]. Here, we use the $\langle{\rm Fe}\rangle$ index to derive an abundance distribution in [Fe/H] for 322 stars with effective temperatures between 3900 K and 5160 K. Our derived values of [Fe/H] agree well with those measured from high--resolution echelle spectra (e.g., McWilliam \& Rich [ApJS, 91, 749 (1994)]) for the small number of stars in common. We find a mean abundance $\langle{\rm [Fe/H]}\rangle = -0.11 \pm 0.04$ for our sample of Baade's Window K giants. More than half the sample lie in the range $-0.4 <$ \feh\ $<+0.3$. We estimate line--of--sight distances for individual stars in our sample and confirm that, in Baade's Window, most K giants with $V < 15.5$ are foreground disk stars, but the great majority (more than 80\%) with $V > 16$ belong to the bulge. We also compare the metallicities derived from the CN and Mg$_2$ indices to those from iron. Most of the metal--rich stars in our sample appear to be CN--weak, in contrast to the situation in metal--rich globular clusters and elliptical galaxies. The metal--poor half of our sample ([Fe/H] $< 0$) shows evidence for a mild Mg overenhancement ([Mg/Fe] $\sim +0.2$); but this is not seen in the more metal--rich stars ([Fe/H] $\geq$ 0). The K giants in Baade's Window therefore share some, but not all, of the characteristics of stars in elliptical galaxies as inferred from their integrated light.