Stress dependence of magnetostriction was utilized to measure the residual stress in butt welded steel plates. The magnetization of steels starts with the domain realignment, which is followed by the rotation of the domain magnetization. The magnetostriction increases while the domain realignment is dominant and then decreases showing a maximum value when the rotation magnetization starts to occur. The maximum magnetostriction depends on the stress level and the relationship between the stress axis and the magnetization direction. In this study, the maximum magnetostriction was measured while applying uniaxial stress to the steel specimens. We found that the maximum decreases when the magnetization direction is parallel to the tensile stress or parallel to the compressive stress and that it increases when magnetized normal to the tensile stress or parallel to the compressive stress. The results were then used as master curves to nondestructively measure the residual stress in butt welded steel plates. The predicted stresses showed good agreement with the strain gauges.