Electrodeposited magnetic Ni‐Fe films are used in storage devices and are applicable as magnetic sensors. In this work, we demonstrate the electrochemical conditions for deposition of permalloy Ni‐Fe nanocrystalline films onto InP(100) surfaces. The prepared Ni‐Fe films were analyzed by scanning electron microscopy to determine surface morphology and by Auger electron spectroscopy for compositional depth profiling. Permalloy films with bulk composition of 81% Ni and 18% Fe were obtained by electrodeposition at −1.2 V (versus standard calomel electrode) in a bath of 0.5 M NiSO4, 0.02 M FeSO4, 0.4 M H3BO3, pH=3. Transmission electron microscopy measurements show that these films consist of fcc Ni‐Fe nanocrystallites embedded in an amorphous matrix. The films also show good magnetic hysteresis loops, with low coercivity. The magnetic properties of these films are improved by an extended anneal at 100 °C. Interdiffusion occurred between Ni‐Fe and the InP substrate after the sample was heated to 300 °C, and consequently a loss of ferromagnetic behavior was observed. ©1995 American Institute of Physics.