The steady diffuser flow of a viscous incompressible fluid with a finite electrical conductivity in the presence of an external magnetic field is analyzed by means of similarity theory. Power series expansions for the velocity and induced magnetic fields are presented, and discussed as dependent on the Reynolds, Hartmann, magnetic Reynolds numbers, and duct angle. Short‐circuit current and the critical values of magnetic Reynolds number and duct angle for flow separation are calculated. It is shown that the induced magnetic field changes the velocity profile and considerably reduces the critical duct angle at which flow separation occurs. The critical magnetic Reynolds number for flow separation becomes smaller as the Reynolds number increases.