Direct observation of the domain structure in (110) [001] grain oriented 3% Si‐Fe sheets with insulating coating of magnesium silicate and phosphate up to 6μm thickness has been successfully made by using a high voltage (200KV) scanning electron microscope. Comparison of two adjacent portions, the one with coating and the other without, in a single grain shows that the coating removes surface closure domains and refines 180° wall spacings. On the concave surface of a bent specimen without coating and that with coating of magnesium silicate and conventional phosphate, transversal stress patterns of ±[100] and ±[010] domains appears which has been observed elsewhere on uncoated sheets under simple longitudinal compressive stress. Application of a new phosphate of lower thermal expansivity in place of conventional one one effectively suppressed the generation of stress pattern. Also, specimens with the new coating are found to give lower magnetostriction than uncoated and the conventionally coated specimens. This indicates that the new coating gives stronger tensile stress to the sheet and counterbalances the compressive stress arising from bending, suppressing the generation of ±[100] and ±[010] domains.