The relationship between the magnetic domain configuration and the groove dimension on the grain oriented 3% Si-Fe sheets is examined in the vicinity of the grooves using a scanning electron microscope. The grooves were formed on the sheet surface by a chemical scratching technique in order to refine the magnetic domains to reduce the eddy current loss. The optimum groove dimension to decrease the loss was determined by observing the dynamic domain wall movement at 50Hz. After the optimum domain refining, the iron loss of 32pm thick sheet became W13/50=0.13W/kg and W17/50=0.21W/kg. The former is lower than that of Fe-based amorphous sheet.