The unusual magnetoresistance (M R) behavior in Sr 2 FeMoO 6 , recently termed as spin-valve type MR (SVMR), presents several anomalies that are little understood so far. The difficulty in probing the origin of this phenomenon, arising from the magnetic property of only a small volume fraction of the ferromagnetic bulk, is circumvented in the present study by the use of ac susceptibility measurements that are sensitive to the slope rather than the magnitude of the magnetization. The present study unravels a spin-glass (SG) like surface layer around each soft ferromagnetic (FM) grain of Sr 2 FeMoO 6 . It is also observed that there is a very strong exchange coupling between the two, generating 'exchange bias' effect, which consequently creates the 'valve', responsible for the unusual M R effects.