Investigation for establishing a residual stress distribution and domain model for amorphous magnetostrictive alloy wires were carried out. Therefore, voltage pulse generation due to the large Barkhausen jump (ep) and the Matteucci effect (ep') was studied as a function of tensile and compressive stress applied in the axial direction. The wires had a composition of Fe77.5Si7.5B15, made by the in-water quenching technique. The amplitude of the voltage pulses (epand ep') and domain nucleation field (H*), are found to decrease smoothly to zero at a critical compressive stress of 5 kg/mm2for the as-cast wires. A reduction in the critical stress to 3 kg/mm2is observed after altering the wire diameter from 125 to 95 µm by etching. Tensile stress above 20 kg/mm2was found to increase epand H*. Squareness ratio (Br/Bs) is observed to be a continous increasing function of applied stress in the range from compressive, zero to tensile stress, being about 0.5 at zero stress. By reducing the diameter by 50% through etching, Br/Bsis found to increase by about 20%. The observed results is indicating a gradually varying residual stress such that the core has a stress induced axial anisotropy and the outer layers has an anisotropy perpendicular to the axis, caused by positive magnetostriction.