The stress evolution on NiFe (20 wt.%) thin films with thickness of 170 nm was studied during thermal cycles up to maximal 530 degreesC. The results are correlated to microstructural analyses carried out on samples cycled to Various maximum temperatures by means of transmission electron microscopy, X-ray diffraction, and Auger electron spectroscopy. In addition, resistance-vs.-temperature measurements yielded more information about the microstructural evolution. The atomic rearrangement in grain boundaries is held responsible for a first irreversible stress contribution appearing between 150 and 300 degreesC. A second, more distinct irreversible tensile stress contribution of approximately 400 MPa occurs between 300 and 400 degreesC. It is explained by abnormal grain growth which can be observed in the same temperature range.