SmcNral, magnetoresistance (m), and magnetic chaacteristics were studied on FeCwAg grain-type alloy thin films annealed under various conditionr. Internal diffusion and interfacial diffusion of the Ag a" in the femmaguetic FeCo grains passessed negative and positive contributions to obtaining a large MR ratio, respectively. The magnetic anisotropy field ( H i ) associated wilh the MU characteristics decreased in accordance with the decrease in resistivity as the annealing tempemme and/or annealing time inneased. This suggests that the Ruderman-Kiltel-Kasuya-yosida interaction between the ferroma&netic grains dominates the Hk in such systems.When two kinds of metal that are mutually insoluble are evaporated or sputtered at the same time, each metal is known to individually form fine grains in the prepared film [I]. Recently, it has been observed that a giant magnetoresistance ( G m ) effect is present in such 'grain-type alloy thin films' comprising magnetic and non-magnetic metals l2-71. These results demonstrated that the G m effect is not restricted to multilayered structures and they showed that additional oppoitunities exist for technological applications. However, the magnetic anisotropy field (H,) associated with the m characteristics, which is important in the application of MR head devices, was too large in such grain systems. From our studies