Ni-Fe alloy was electrodeposited on the surface of polyacrylonitrile (PAN)-based carbon fibers, and catalytic graphitization effect of the heat-treated carbon fibers was investigated by X-ray diffractometry and Raman spectra. It is found that Ni-Fe alloy exhibits significant catalytic effect on the graphitization of the carbon fibers at low temperatures. The degree of graphitization of the carbon fibers coated with Ni-Fe alloy (57.91% Fe, mass fraction) reaches 69.0% through heat treatment at 1 250 °C. However, the degree of graphitization of the carbon fibers without Ni-Fe alloy is only 30.1% after being heat-treated at 2 800 °C. The catalytic effect of Ni-Fe alloy on graphitization of carbon fibers is better than that of Ni or Fe at the same temperature, indicating that Ni and Fe elements have synergic catalytic function. Furthermore, Fe content in the Ni-Fe alloy also influences catalytic effect. The catalytic graphitization of Ni-Fe alloy follows the dissolution-precipitation mechanism.