Permalloy films for bubble circuits were investigated. Films were prepared by the vacuum evaporation of Ni‐Fe alloys containing 70% to 90% Ni onto heated glass substrates (150°C to 340°C). The films were then etched to form 10‐μm wide strips. From observations of the Bitter patterns, it was shown that an anisotropy was induced in the negative magnetostrictive films. They showed high magnetoresistive sensitivity. Some films had a stripe domain structure and exhibited higher magnetoresistance, but the coercive force was too large for bubble propagation. For a practical bubble circuit, 84% Ni‐Fe films evaporated onto 250°C substrates were selected by optimizing the magnetoresistive sensitivity and the coercivity. Using this material, a practical bubble circuit was fabricated for 3‐μm bubbles with the serpentine detector of 375 Ω, and an output sensitivity of 1 mV/mA was obtained at a driving field of 40 Oe.