A magnetic-based non-destructive evaluation (NDE) method, which employs Barkhausen effect and measurement of the hysteresis loops, is used to correlate the magnetic and mechanical properties of ultra low carbon (ULC) steel. In particular, the NDE method was used to detect small deviations from linearity that occur in the stress-strain curve well below the 0.2% offset strain, and which generally defines the yield point in materials. Results show that three parameters: jumpsum and jumpsum rate (derived from the Barkhausen spectrum), and the relative permeability (derived from the B-H loops) varies sensitively with small permanent strains, and can be related to the plastic deformation in ULC steels. Investigation of micromagnetic structure revealed that plastic deformation leaves a residual stress state in the samples; the associated magneto-elastic energy makes the favorable easy axis of magnetization in a given grain to be the one that lies closest to the tensile axis. The consequence of this realignment of domains is that wall motion becomes intergranular in nature (as opposed to intragranular in unstrained samples). As a result, the more complex grain boundaries instead of dislocations, become the dominant pinning sites for domain walls. These observations provide a microscopic interpretation of the observed changes in the measured magnetic properties.