Oxygen contamination during rf sputter deposition of NiFe films is shown to cause adverse electrical and magnetic properties. This contamination is most pronounced in films deposited at low bias voltages. Although the bias voltage is not a direct cause of these changes, it is a factor which determines the amount of available oxygen in the sputtering gas which is incorporated into the interior of the films. In addition, a thin oxide layer is frequently found on both top and bottom surfaces of the films. It contains as much as 2 at. % oxygen, a concentration which is shown to mark the onset of deteriorating electrical and magnetic properties when occurring uniformly throughout NiFe in films.