Excellent soft magnetic properties, high μeff (2000 at 5 MHz) and high Bs (2.2T) were obtained in Fe films fabricated by using the facing target type dc magnetron sputtering method in Ar+N2 plasma and annealed at 300°C. In these films, (110) preferred orientation of grains and the reduction of grain size of below 150Å were observed. Lattice spacing of (110) plane was found to be expanded by 0.28% from the bulk value. Considering the magnetostrictive anisotropy due to lattice strain, total anisotropy energy in (110) plane of grain was calculated. The results show that total anisotropy energy decreases and takes minimum at lattice spacing of (110) slightly expanded from bcc to bet by 0.28%. This value agrees well with the expansion of bcc lattice for the films which show high μeff. Excellent soft magnetic properties were realized by decreases of total anisotropy of grain by lattice strain and reduction of grain size, and were not related to the magnetostriction of films.