Cross-sectional images of the multilayered structures of magnetoresistive (MR) read heads showing the nanostructure,of individual layers are desirable for process evaluation and failure analysis. We have successfully prepared thin cross-sections of MR read heads with soft-adjacent-layer transverse-biased sensor and pattern exchange longitudinal biasing for study by transmission electron microscopy (TEM). The perfection and defects of individual structural layers (about 10-20 nm thick) of the MR head an clearly visible in cross-sectional TEM images. Two very thin defect layers due to residual photoresist materials have been observed at the MR sensor-exchange layer interface and exchange-conducting layer interface. The origin of the defect layers is the incomplete removal of residual photoresist materials by ion-beam etching during processing. Deeper etching by ion-beam milling reduces the size of the defect layers. The dummy resistance of the MR sensor is substantially reduced after deeper etching. This is the first study of the nanostructure of MR heads and the first demonstration of process evaluation using TEM in magnetic disc-drive technology.