The microstructure and the magnetic properties of polycrystalline Fe films were investigated in detail by controlling the condition of the ion-beam sputtering with an Ar-assisted process. Fe films were deposited at a sputtering-beam voltage, V-s, in the range of 300-1800 V. The soft magnetic properties of the Fe films significantly improved with increasing V-s, when the saturation magnetization, 4 pi M(s), and the coercivity, H-c, were 16-21.5 kG and 5 Oe, respectively. This improvement was caused by the decrease of the crystallite size. In order to control the Fe crystallite size, Fe films were deposited when the Ar-assisted beam voltage, V-A, was in the range of 80-2000 V, with the condition that the Ar to Fe arrival ratios were 1:1 (R(A)=1) and 1:0.1 (R(A)=0.1). Fe films with excellent soft magnetic properties, such as 4 pi M(s) of about 21.5 kG and H-c of 2.5 Oe, were deposited on the substrate and bombarded by a V-A of 200 V at R(A)=1 and a V-A of 400 V at R(A)=0.1. The result implies that bombardment by Ar ions, with the proper energy and flux, assists the improvement of the soft magnetic properties.