The figure of merit of magnetoresistive Permalloy thin films, which are commonly used for bubble domain sensors, is shown to improve considerably after annealing treatments. This improvement is caused by a lowering of the electrical resistivity, due to particle size and grain growth with activation energies of 0.70 ± 0.05 eV and 1.86 ± 0.15 eV, respectively. Comparisons indicate that thin permalloy films, which are deposited at 250°C and subsequently annealed, are superior as sensor materials to those deposited at 325°C. © 1973, IEEE. All rights reserved.