Sm-Fe thin films as giant magnetostrictive materials were prepared by d.c. magnetron sputtering process with Ar or mixed Ar-N₂ gas. Diffraction peaks of Sm nitride and Fe nitride were observed at 3.8×10^-3 Pa N₂ partial pressure. With increasing N₂ partial pressure, saturated magnetostriction of the Sm-Fe thin films decreased from 1400 ppm to 600 ppm. The maximum value of magnetostrictive susceptibility was showed at 2.3×10^-3 Pa of N₂ partial pressure. A compression stress with a small addition of N into Sm-Fe thin films may lead to increase of magnetostrictive susceptibility.