Studies of the temperature dependence of the unidirectional anisotropy of permalloy films as a function of the oxidation of the surface are reported and correlated with electron diffration studies of the surface oxides. Hematite (&agr;‐Fe2O3) is found to correlate with the existence of the anisotropy in films oxidized at 120°C in which the transition temperature is near 40°K. A specimen oxidized at 250°C showed a higher and broader transition though no &agr;‐Fe2O3could be correlated with the existence of the unidirectional anisotropy.