X-ray diffraction was used to measure the stress and the dislocation distribution in a nickel layer electrodeposited to a thickness of 2 lam on a steel substrate before and after annealing at 525 K. At various specimen tilt angles the {311} diffraction lines were measured. From the diffraction line positions and shapes the stress and information about the distribution of dislocations in the crystallites were obtained. Before annealing the rotationally symmetric tensile stress in the layer was 210 MPa and the diffraction line shapes did not show any dependence on the tilt angle. After annealing the stress decreased to a value of -80 MPa and the diffraction line shapes showed a dependence on specimen tilt angle that was attributed to changes in the dislocation distribution. Using simulation it was shown that during annealing dislocations with a glide direction along the direction of maximum shear stress were annihilated preferentially.