The effect of in-plane strain in (111)-oriented epitaxial TbFe2 films on the magnetization orientations was studied. Magnetocrystalline anisotropy, shape anisotropy, and magnetoelastic energy were calculated to determine the magnetization orientation in the presence of various in-plane strains. Theoretical considerations indicate that a compressive strain smaller than -0.065% can induce an out-of-plane magnetization. DC magnetron sputtering from Tb and Fe elemental targets was used to grow 50, 100, 200, and 400 Å thick epitaxial TbFe2(111) films at 600°C on (110)-oriented sapphire substrates with 1000 Å thick epitaxial Mo(110) buffer layers. The growth rate of the TbFe2(111) films was 1.44 Å/sec. X-ray diffractometry, Rutherford backscattering spectrometry, and vibrating sample magnetometry were used to characterize the crystal structure, epitaxial orientation, composition, stress and strain state, and magnetic properties of the TbFe2 films. The TbFe2(111) films were epitaxial with twins rotated by 60° and were in tensile strain states with the resulting in-plane magnetization.