Sheets of Fe-6.5 wt. % Si and Fe-6.5 wt. % Si-0.5 wt. % Cu with the thickness of 0.3 mm have been produced by hot and warm rolling. The microstructure, texture evolution and magnetic properties of the two alloys were investigated. It was found that the addition of 0.5 wt. % Cu promoted the formation of shear bands during warm rolling, and enhanced the {110}<001> texture at surface layer and {111}<112> texture in the middle layer. After annealing treatment, a strong η fiber texture with a peak at {110}<001> was formed in the Fe-6.5 wt. % Si-0.5 wt. % Cu sample, while the Fe-6.5 wt. % Si sample was characterized by complex γ, η and λ fibers. The formation of dominating η fiber in the annealed Fe-6.5 wt. % Si-0.5 wt. % Cu sample is attributed to the shear bands formed in {111}<112> oriented grains. These shear bands in {111}<112> oriented grains acted as the nucleation sites of η oriented grains and promoted the growth of Goss oriented grains. The presence of strong η fiber with a peak at Goss in Fe-6.5 wt. % Si-0.5 wt. % Cu sample was the cause for the higher magnetic induction observed for this sample than for the Fe-6.5 wt. % Si sample.