The magneto-optic Faraday effect was used to study films of permalloy (435 Å) and EuO (350-1400 Å) in intimate contact. The two films exhibit negative (antiparallel) coupling, that is, more external field is required to align the two magnetizations parallel than antiparallel. This causes the minor loop of permalloy to shift by as much as 35 Oe at 10°K. The shift is independent of EuO thickness, indicating an interfacial effect. The coupling energy is 0.13 erg/cm2, about half the value for coupled films of Fe and EuO (0.22-0.25 erg/cm2), but since the magnetization of permalloy is also half that of Fe, interface conditions for the two sets of coupled films appear to be quite similar. To establish the nature of the coupling, thin dielectric layers (Eu2O3, 11-44 Å) were introduced between the EuO and the permalloy. A 22-Å intermediate layer reduced the coupling energy tenfold. This indicates that the negative coupling between the films is due to exchange interaction. Negative exchange coupling can predict the switching behavior of composite permalloy-EuS films as well. However, the model previously used for permalloy-EuS films, involving positive exchange coupling and a quasi Bloch wall between the films, cannot explain the results of this paper. © 1970 The American Institute of Physics.