Compatibility between plasma and reduced activation ferritic steel, which is the leading candidate for the structural material of a fusion demonstration reactor, has been investigated in the Advanced Material Tokamak EXperiment (AMTEX). Ferritic plates (FPs) were installed progressively in the JFT-2M tokamak. The effect of ferromagnetism on plasma production, control, confinement, and stability has been investigated. Impurity release behavior has also been investigated. Even when the inside vacuum vessel wall was fully covered with the FPs and the tokamak plasma was operated close to the wall, no deleterious effect was observed, and the normalized beta could be increased up to ~3.5. Thus, encouraging results are obtained for application of this material to the demonstration reactor.