Fe-B films sputtered in Ar+N2 plasma were investigated in order to obtain film with high initial permeability. Importance was placed on elucidation of the relation between the initial permeability μi and parameters of the film structure such as the phase, grain size, and lattice strain. Fe-B (1 to 4 at% B) films sputtered in Ar+5%N2 plasma exhibit a high μi of about 2000 after annealing at 400 °C, and about 1000 after annealing at 500°C. The results of X-ray and electron diffraction patterns indicate that films with high μi consist of the α phase. By comparing this with results for Fe-N films, it is suggested that the high μi of Fe-B-N films is caused by the reduction of grain sizes and induced lattice strain, as well as other metallurgical structures such as in homogeneities.