Magnetoresistive sensors based upon the anisotropic magnetoresistive effect of ferromagnetic thin films are in wide use. A higher resolution is required of these sensors because of the higher performance of equipment for factory automation and office automation. In this report, the effects of the size of the MR stripe, of stress in the MR stripe and of noise posing problems for practical applications are summarized. In addition, the characteristics of rotary encoders with sinusoidal output, which can achieve higher resolution without a narrower magnetic recording pitch, are introduced.