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We report dramatic improvements in both magnetostriction level and strain derivative of polycrystalline cobalt ferrite as a result of magnetic annealing. Magnetostrictive cobalt ferrite composites have potential for use in advanced magnetomechanical stress and torque sensors due to their high sensitivity of magnetization to applied stresses and high levels of magnetostriction. Results show that annealing cobalt ferrite at 300°C in air for 36 h under a dc field of 318 kA/m (4 kOe) induced a uniaxial anisotropy with the easy axis being along the annealing field direction. Under hard axis applied fields, the maximum magnetostriction measured along the hard axis at room temperature increased in magnitude from -200×10-6to -252×10-6 after annealing. The maximum strain derivative (dλ/dH)max, which is related to stress sensitivity, increased from 1.5×10-9 A-1m to 3.9×10-9 A-1m. The results can be interpreted in terms of the effects of induced uniaxial anisotropy on the domain structure and magnetization processes.