We have investigated the growth and magnetic properties of 0-3 ML (monolayers) Fe on stepped Pd(110) with reflection high-energy electron diffraction (RHEED), low-energy electron diffraction, and the surface magneto-optic Kerr effect in order to relate the morphology, structure, and magnetic properties in a low-dimensional system. The Fe films grown at 340 K are smooth and pseudomorphic up to 1.5 ML, where three-dimensional growth and lateral lattice relaxation ensues. The in-plane row spacing along the [110] direction decreases by similar to5%-6% at 3 ML. RHEED oscillations with I ML period are observed in the (1,0), (2,0), and the center of the (0,0) streak intensity. The tail of the (0,0) streak at low exit angle, however, has a 0.5 ML period oscillation, which suggests step decoration growth. Submonolayer Fe films remain ferromagnetic above similar to0.3 ML. The magnetic easy axis is initially perpendicular to the surface and is in-plane for Fe thickness > 1.5 ML. Between 0.9 and 1.2 ML, there appear to be mixed magnetic phases as indicated by an increase in coercivity.