Permalloys were successfully fabricated by melt drag casting in the present study, and their microstructure and consequent magnetic properties have been investigated as a function of Si content. In order to understand the relationship between magnetic properties and Si content, microstructure and texture were observed and phase analysis were performed by TEM. The effective permeability went through a maximum value at $2\%$ Si and then decreased with increasing Si content. Increasing Si content enlarged grain size, which resulted in improvement of permeability. However, over-added Si caused the formation of $Ni_3Fe$ order phase so that $5\%$ Si added permalloys had the smallest permeability.