The rescue excavations of the Virbaliūnai ancient settlement have unearthed an iron production site of the middle of the first millennium AD. Nine slag-pit type furnace bottoms with the slaggy mass in situ, pieces of iron-smelting slag, potsherds and other finds have been excavated here. An attempt at a metallurgical interpretation of both the furnace structure and the iron smelting process at the site is discussed in this paper. The results of a metallographic examination of crude iron clot as well as the data from chemical analyses of the smelting slags are also presented here.