The nano-oxide layer (NOL) inside the spin valve can smooth the Surface topography, which results in two effects: suppressing the ferromagnetic Neel magnetostatic coupling and enhancing the RKKY exchange coupling between the free layer and the pinned layer. As a consequence, MR ratio is increased in the spin valve with NOL layer inside the pinned layer or on top of the free layer. Because of the enhancement of the specular reflectivity in the NOL added spin valves, the oscillation of the interlayer coupling field with respect to the thickness of the spacer layer and even the thickness of the cap layer has been observed. In terms of the performance of both electrical and magnetic properties of the spin valves, CoFe-O turns out to be the best materials inside the pinned layer. But, as a cap layer, ZnO is the best choice because of its crystalline growth on top of the free layer CoFe, which causes the enhancement of the MR ratio. About 4.5% of MR ratio has been achieved in a NOL added spin valve in the current-perpendicular-to-plane configuration. Large MR ratio observed in the NOL added CPP sensor is due to the increment of the interface scattering and current confined path in the NOL added pinned layer. (c) 2005 Elsevier B.V. All rights reserved.