The influence of interface mixing upon the magnetic domain properties in perpendicularly magnetized ultrathin films has been studied using Fe/2 ML Ni/W͑110͒ samples. Annealing of films with an Fe thickness of 1-1.5 ML produces interface mixing that can be quantified using Auger electron spectroscopy, and related to the changes in domain properties ͑such as the activation energy for domain wall pinning, the domain correlation length, and domain concentration͒ as measured by the low frequency ac magnetic susceptibility. Analysis of the susceptibility, as well as model calculations of the magnetic anisotropy, suggest that pinning is caused by the perturbation of the domain wall energy by monolayer steps in thickness. Initially, annealing smooths the film, thus increasing the domain correlation length and activation energy. Further annealing causes mixing at the Fe/Ni interface, which reduces the anisotropy, thus reducing the activation energy and increasing the domain concentration. Annealing above 550 K breaks up the film and there is no magnetic response in the measurable temperature range.