Influence of heat treatment on structure and Giant Magnetoimpedance (GMI) effect of permalloy thin films (80Ni20Fe) electrodeposited on insulating substrates was investigated using electron scanning microscope (SEM), X-ray Diffraction and GMI ratio measurement. Results showed that annealing reduced lattice defects of electrodeposited films and facilitated the development of texture, thereby enhanced magnetic properties of the obtained films. The increasing temperature resulted to the increase of maximum GMI ratio (GMIRmax) due to the higher defect reduction. GMIRmax increased with annealing time at both annealing temperatures 250o C and 450o C and reached the saturated value when the annealing time was 120 min.