In a thin film microtransformcr with a magnetostrictive core, the amount of coupling between the two transformer coils depends on the strain the core is exposed to. Therefore, such a device lends itself to be used as a highly efficient strain gauge. This paper investigates the usefulness of “permalloy”, a NiFe alloy, as a magnetostrictive thin film core material. NiFe 81/19, a composition with a magnetostrictive coefficient close to zero, is widely in use in magnetic data recording. To find a NiFe composition with maximal magnetostriction, the nickel content of NiFe films (which containalso a small amount of Ta) was varied between 35% and 81%. The films were deposited by co-sputtering. As a result, the composition of choice for a magnetostrictive core material was NiFe 43/57.