Temperature changes during mechanical processing such as grinding of steel parts can cause phase changes in the microstructure. Thermal shock during the process can give rise to localized surface residual stress. The net result can be reduced wear resistance and fatigue life leading to early failure during service. Effective methods for the detection of such damage are necessary. Barkhausen emissions, which arise from discontinuous motion of domain walls, are sensitive to microstructual changes that affect domain dynamics. Detected Barkhausen signals are predominantly from a surface layer about 200 μm thick, those from deeper being attenuated due to eddy currents. An analysis of the detected signals can provide an indication of the surface condition of the material.Barkhausen signals from parts ground under controlled conditions were found to be dependent on the grinding process conditions. The signal changes were consistent with residual stress measured by x‐ray diffraction and with hardness measurements that are indicative of changes in microstructure.