The nitriding of Fe-3% Si alloy in the range 500–1000°C is investigated by spectral chemical analysis, X-ray microspectral analysis, and glow-discharge optical-emission spectrometry (GD-OES). In the nitriding system, inert carrier gas (95% N2 + 5% H2) is saturated with NH3 vapor by passing through aqueous NH3 solution. The optimal nitriding parameters are established. In the nitriding of Fe-3% Si alloy after decarburizing annealing, most of the nitrogen is in a subsurface layer beyond the internal oxidation zone, in the form of disperse Si3N4 phase. If the nitriding potential of the atmosphere is increased, austenite is formed in the internal oxidation zone. That hinders the formation of an electrically insulating coating in subsequent treatment. In high-temperature annealing, the heating of previously nitrided Fe-3% Si alloy is accompanied by decrease in the nitrogen concentration. Prior to anomalous grain growth, the residual nitrogen content corresponds to the aluminum concentration in the material.