The formation of the insulating AlO x tunnel barrier is a critical and sensitive process in magnetic tunnel junctions. Both the natural oxidation and the plasma oxidation methods were employed to fabricate the AlO x insulating layer in this study. In the natural oxidation, the Al layer was exposed to pure oxygen gas at 20 Torr for up to 50 min to produce the AlO x tunnel barrier. It was revealed by high resolution transmission electron microscopy that the oxidation occurred preferentially through the grain boundary of Al grains. Also, the AlO x grains expanded isotropically when fully oxidized, thereby making the surface of the AlO x layer modulated. In plasma oxidation, the oxygen plasma was used at 20 mTorr of pure oxygen gas for up to 30 s and the flat AlO x layer formed uniformly on the Al layer. It had sharp interfaces with the underlying metallic Al and the rate of oxide layer growth decreased as the oxidation proceeded.