Soft magnetic iron-based alloys are used as magnetic cores in electric motors, power inverters, inductors, etc. Residual stress introduced during the formation process such as mechanical punching deteriorates the permeability through inverse magnetostrictive effect. Low magnetostriction is thus required for the core materials. This chapter deals the theory and the materials focusing on magnetostriction. First, the influence of residual stress on the permeability is explained to show that low magnetostriction is required to achieve high permeability. The basic theory of magnetostriction is then explained based on elastic and magneto-elastic energies. Next, magnetostrictive coefficients, λ100 and λ111, are summarized for various single-crystal iron-based alloys cited from published references, and the magnetostriction behaviors are characterized for polycrystalline materials with non-oriented and oriented crystal grain structures. Finally based on the data and the theoretical analysis, conditions to realize soft magnetic materials with nearly zero magnetostriction are discussed, which is required to enhance the energy conversion efficiency in electromagnetic systems.