Possibility for realization of soft magnetic properties was discussed for 40 wt%Co-Fe alloy films with large magnetostriction constants sputtered in Ar+N₂ plasma. The value of H_c of about 10 Oe along the hard axis of magnetization was obtained after annealing at 500°C The soft magnetic properties for these films are mainly determined by the lattice strain rather than macroscopically induced uniaxial magnetic anisotropy K_u. The calculated magnetic anisotropy energy U in each grain, taking account of magnetoelastic energy, drastically increases with slight increases in the lattice strain. Therefore, in order to obtain excellent soft magnetic properties, the relaxation of lattice strain less than 0.1 % should be important.