The closed type DC arc furnace was investigated as a smelt reduction furnace for reducing steelmaking slag, especially molten hot slag. The reduction capability and its characteristics in DC arc furnace were clarified through the experiments of slag reduction in closed type pilot scale DC arc furnace and in open type commercial scale DC arc furnace. For further comprehension of the reaction mechanism flow pattern in slag and metal phases was examined by numerical analysis. Moreover the effectiveness of using hot slag was shown by estimating the heat balance of the typical test operation using cold slag.