A general theory concerning the properties of magnetic materials having a nonuniform saturation magnetization is developed. In this theory, the local saturation magnetization and the local exchange interaction are assumed to vary in an arbitrary manner throughout the sample. It is further assumed that a dc magnetic field is applied which is sufficiently large to magnetize the sample substantially to saturation. The general theory is then specialized for a calculation of the static magnetization, assuming that the host material contains inclusions of a material with a different saturation magnetization. If all inclusions are fairly large, the effect of the exchange interaction becomes negligible and a result previously derived by Ne´el is obtained. The inclusion of exchange reduces the deviation of the magnetization from its saturation value, particularly at low values of the internal field. If exchange is neglected, this deviation becomes infinitely large at zero internal field. If exchange is included, however, the deviation remains finite. The theory is, therefore (for suitable materials), still approximately valid at remanence.