Electromagnetic induction on a layered earth model is reexamined when the usually neglected magnetic permeability contrast is considered. It is shown that for a two-layered earth model, where the upper layer is permeable, the electromagnetic induction response is modified over the nonpermeable case. Universal plots of normalized induced fields due to an electrically small current loop are produced. Special attention is paid to the case when the upper earth layer consists of a superparamagnetic material. This formulation should be useful for interpreting airborne electromagnetic systems and in cases where superparamagnetic mineral content is present. ¿ 1999 American Geophysical Union