The impact of stress-driven structural transitions and of film strain on the magnetic properties of nm ferromagnetic films is discussed. The stress-induced bending of film-substrate composites is analysed to derive information on film stress due to lattice mismatch or due to surface-stress effects. The magneto-elastic coupling in epitaxial films is determined directly from the magnetostrictive bending of the substrate. The combination of stress measurements with magnetic investigations by the magneto-optical Kerr effect (MOKE) reveals the modification of the magnetic anisotropy by film stress. Stress-strain relations are derived for various epitaxial orientations to facilitate the analysis of the substrate curvature. Biaxial film stress and magnetoelastic coupling coefficients are measured in epitaxial Fe films in situ on W single-crystal substrates. Tremendous film stress of more than 10 GPa is measured in pseudomorphic Fe layers, and the important role of film stress as a driving force for the formation of misfit distortions and for inducing changes of the growth mode in monolayer thin films is presented. The direct measurement of the magneto-elastic coupling in epitaxial films proves that the magnitude and sign of the magneto-elastic coupling deviate from the respective bulk value. Even a small film strain of order 0.1% is found to induce a significant change of the effective magneto-elastic coupling coefficient. This peculiar behaviour is ascribed to a second-order strain dependence of the ma,magneto-elastic energy density, in contrast to the Linear strain dependence that is valid for bulk samples.