The influences of different parameters, such as reaction temperature, yttrium (Y) content, and H2 concentration, on the particle size and morphological structure of Mo powder prepared via the H2 reduction of MoO2, were investigated in the work. TG, XRD, FE-SEM, laser particle size analysis, model fitting, and orthogonal design experiment methods were adopted to analyze the reaction kinetic and reduction mechanism. The results showed that the optimum conditions for preparing ultrafine Mo powder were recognized as 1073 K, 1 mass% Y content, and a H2 concentration of 0.000576 mol·cm−2·min−1, which enabled the as-prepared Mo powder with a particle size as small as 107 nm. A new interfacial chemical reaction model with the consideration of reaction temperature, H2 concentration, and sample thickness, was proposed to analyze the reaction kinetic. It was found that the curves predicted by the model agreed well with the experimental data, with the apparent activation energy extracted to be 94.686 kJ/mol. The effect of different individual parameter on the reaction rate and the possible reduction mechanism were also elucidated.