Materials like iron, nickel, and cobalt consist of magnetic domains, within which the magnetic dipoles are arranged parallel to each other. The magnetic dipoles are rigidly aligned in the same direction within a domain by quantum mechanical coupling among the atoms. This coupling is so strong that even thermal agitation at room temperature cannot break it. The result is that each domain has a net dipole moment. However, some materials have weaker coupling, and are ferromagnetic at lower temperatures.

When the magnetic field is applied, the dipole moments rotate to align with the field. In addition, the aligned domains tend to increase in size at the expense of unaligned ones. The net effect of these two processes results in creating a net magnetic dipole moment for the ferromagnet that is directed along the applied magnetic field. This net magnetic dipole moment is much larger than that of a paramagnetic sample, and the domains, with their large numbers of atoms, do not become misaligned by thermal agitation. Therefore, induced magnetization is very large in ferromagnets.

The relative permeability of ferromagnets is much larger than unity, of the order of 1,000 to 100,000. Thus, a ferromagnetic material is strongly magnetized by the field from a permanent magnet and is attracted to it. The susceptibility value for ferromagnetic materials is usually of the order of 10³ to 10⁴, and this depends on the history of the applied magnetic field.

An increase in the external field leads to a state of magnetic saturation in the magnetization curve. However, reducing the field to zero does not lead to zero magnetization. This is known as hysteresis. When the field is applied in the reverse direction, the domains slowly flip, and the moment reaches zero at the coercive field. The process of domain alignment repeats along the negative field direction, and the hysteresis loop is completed.

Ferromagnets with a narrow hysteresis loop, where the magnetization disappears once the magnetic field is removed, are termed as soft ferromagnets. Ferromagnets with a broader loop are called hard ferromagnets. For hard ferromagnets, the magnetization persists, even if the external magnetic field is removed.

Soft ferromagnetic materials are used in electromagnets, transformer cores, motors, and generators. Permanent magnets like alnico, used in compass needles, use hard ferromagnets. A permanent magnet can be demagnetized by hard blows or by heating it. Increased thermal motion at a higher temperature can disrupt and randomize the orientation and size of the domains. Further, ferromagnets turn into paramagnets at a temperature known as the Curie temperature. For example, the Curie temperature for iron is 1043 K. There are several elements and alloys that have Curie temperatures much lower than room temperature, and are ferromagnetic only below those temperatures.