This work is directed to the elucidation of the magnetic microstructure of coronal loops under the stresses imposed by footpoint motion due to photospheric convection. The microstructure determines the (i) the extent and width of the singular current layers postulated earlier, (ii) the filamentation of the current flow along the field lines and the resultant enhanced dissipation. It could also lead to the presence of stochastic magnetic fields with a greatly enhanced rate for shear Alfven waves. Thus the magnetic microstructure plays a critical role in the physical processes that contribute to solar coronal heating. This microstructure is also critical in the reconnection processes which relax the stressed magnetic field to a lower energy state. These processes are investigated using a mathematical model that is treated both analytically and through numerical simulation. The calculations thus obtained are compared with observational data. ***