We have studied the process by which the in‐plane magnetization of an ultrathin (4–11 ML) epitaxial iron film reverses under the action of an external magnetic field. Kerr effect measurements reveal a small in‐plane uniaxial anisotropy superimposed on the cubic magnetocrystalline anisotropy which greatly influences the reversal. In addition, we find that depending upon the field orientation, reversal can proceed either via a ‘‘1‐jump’’ mechanism, by the sweeping of 180° domain walls and which gives a classic square hysteresis loop, or by a ‘‘2‐jump’’ mechanism, by the sweeping of 90° domain walls at two distinct applied field strengths—this gives a more unusual hysteresis loop with two irreversible transitions. We have developed a simple phenomenological energy model which explains how so small a uniaxial anisotropy can play so significant a role in the reversal process. The model explains the two reversal mechanisms and predicts with good experimental agreement which should be observed for different applied field orientations. ©1995 American Institute of Physics.