A microscopic Faraday effect apparatus is described by means of which the fine structure of the domain configurations in thin Permalloy films has been observed. The direction of the magnetization in cross‐tie domain walls and other domain configurations has been deduced from their light, dark, or gray appearance and known polarizer angles. Faraday effect hysteresis loops are presented in support of a proposal that domain walls at 45° to the easy direction represent an intermediate demagnetized state in films having a high degree of uniaxial anisotropy.