Mechanical and magnetic degradation of ferromagnetic films under contact stress was systematically investigated through novel experiments and analytical simulations. Permalloy (Ni 80Fe 20) film was deposited onto silicon substrate, and two different thicknesses of permalloy film (50 nm for sample A and 300 nm for sample B) were examined in this study. Magnetic properties were obtained from B-H loop tracer hysteresis measurement, while the mechanical properties (i.e., hardness and elastic modulus) were measured using nanoindentation techniques. It was observed that the 50 nm thick permalloy film showed weaker magnetic strength (lower coercivity and saturation magnetic flux values) and lower hardness than the 300 nm thick permalloy film. To apply mechanical contact stress on the permalloy film samples, nanoscratch experiments were performed using ramp and constant loading scratch profiles. Then, the resulting mechanical degradation (surface physical damage) of the two samples was determined from atomic force microscope measurements, and the corresponding magnetic degradation was analyzed using magnetic force microscope measurements. It was found that the magnetic degradation was more sensitive to the applied contact stress than the mechanical degradation. Comparing the two permalloy film samples, it was observed that the 50 nm thick permalloy film showed more magnetic degradation under the same contact stress, which could be attributed to its lower material strength.