The effect of microstructural change during isothermal heat treatment on structure-sensitive magnetic properties has been investigated for 1Cr-1Mo-0.25V steel. Magnetic permeability increased, but coercive force and Vickers hardness decreased as ageing time increased. During the isothermal heat treatment, Mn 2 3 C 6 and (Cr 2 . 5 Fe 4 . 3 Mo 0 . 1 )C 3 carbides were found at grain boundaries. These carbides were formed by C, Cr, Mo, Mn, etc., which moved from matrix to grain boundary. The decrease of carbon in matrix resulted in the decrease of Vickers hardness and coercive force and the increase of permeability. The correlation between mechanical and magnetic properties indicates that the mechanical hardness and microstructural change could well be evaluated nondestructively by measuring permeability or coercive force.