The magnetic properties and crystalline structure of expanded austenite obtained by ion beam nitriding of AISI 316 steel are investigated. Magnetic force microscopy reveals that the nitrogen expanded austenite has two different layers, an outermost ferromagnetic layer and a paramagnetic layer beneath it. Superimposing the nitrogen concentration profile determined by secondary neutral mass spectrometry and the magnetic force microscopy image, one can see that the paramagnetic-ferromagnetic transition takes place at the inflection point of the nitrogen concentration profile at about 14Ϯ 2 N at. %. Conventional and glancing angle x-ray diffraction suggests that nitrogen could occupy first tetrahedral interstitial positions ͑nitrogen-poor paramagnetic phase͒ and then, after saturation of Cr traps, octahedral interstitial positions ͑nitrogen-rich ferromagnetic phase͒. The ferromagnetic-paramagnetic transition is seen to be governed by Cr ͑traps͒-N interactions.