The magnetic domains of nanocrystalline Fe84Nb6B10 annealed under static and rotating magnetic fields have been investigated by means of magneto-optical Kerr effect (MOKE) microscopy in order to clarify the origin of the dramatic magnetic softening brought about by rotating field annealing. The coercivity (Hc) values after static- and rotating-magnetic field annealings are 5.9 and 3.0A/m, respectively. The MOKE image after static field annealing implies a highly coherent uniaxial anisotropy (Ku) in the sample whereas no sign of such a strong Ku is evident in the domain configuration after rotating field annealing. Our analytical solution of the random anisotropy model with additional Ku predicts that the fluctuating amplitude of the effective anisotropy (δK) in nanocrystalline Fe84Nb6B10 decreases from 20to11J/m3 by removing Ku. The observed reduction of Hc may be attributed to this decrease in δK induced by rotating field annealing.