Amorphous Tb‐Fe thin films prepared by dual magnetron cosputtering were exposed to air at 200 °C in order to investigate the evolution of the films as they oxidize. Magnetic properties of the films were measured using a vibrating‐sample magnetometer and torque magnetometer and are interpreted in light of the structure of the films as revealed by Auger electron spectroscopy and composition‐depth profiling. This leads to a detailed and self‐consistent description of the oxidation process. At first a uniform and homogeneous oxidation layer grows from the surface toward the substrate. This layer has a high magnetization and low intrinsic anisotropy and consists of an intimate mixture of oxidized Tb and metallic TbxFe(1−x). The initially high intrinsic anisotropy of the unoxidized region decreases relatively quickly, while the composition changes only slowly as this region shrinks. When the oxidation layer reaches the substrate, two oxide phases (Fe2O3and Tb2O3) begin to grow at the surface exposed to air.