In order to study the magnetization process in epitaxial NiO/NiFe bilayers we use the magneto-optical indicator film (MOIF) technique.[8] The MOIF technique is based on the Faraday rotation of linearly polarized light in an indicator film, a Bi-substituted iron garnet film with in-plane anisotropy, which is placed on the sample. The polarized light passes through the indicator film and is reflected back by an Al underlayer covering the bottom surface of the film, which is adjacent to the sample surface. While the light is passing through the indicator film its polarization experiences a Faraday rotation through an angle proportional to the component of the local magnetic field parallel to the light propagation direction. The transmitted intensity of the reflected beam through an analyzing polarizer varies with the local field in the light path. The bright or dark variations of the image represent the variations of the perpendicular stray field component. The resulting real-time Faraday portrait of the sample's stray magnetic fields presents the information about the static or dynamical domain structure as well as the defects of crystal structure which affect the spin distribution in the sample. The macroscopic hysteresis loops of the films were measured with a vibrating sample magnetometer. In addition, optical reflecting microscopy and a photoelasticity method[9] were used to reveal the defect structure of the bilayers. The NiO(500Å)/NiFe(100Å) bilayers were grown using ion-beam sputtering onto the single crystal (001) MgO and polycrystalline Si substrates.[7] NiFe 500Å films grown onto (001) MgO or onto Si without NiO buffers were also prepared. Both uniaxial (in NiFe) and unidirectional (in NiO/NiFe) anisotropy was established during deposition by means of permanent magnets which produced a 300 Oe uniform bias field in the plane of the substrate.