Abstract: A magnetoresitive transducer has an insulating gap layer of variable thickness. The transducer includes a magnetoresistive layer disposed in an active region, and a first magnetic shield layer disposed in the active region and a field region. An insulating layer is spaced between the magnetoresistive layer and the magnetic shield layer. The insulating layer is thinner in the active region than in the field region. The probability of other layers bridging through the insulating layer in the field region is substantially reduced. The method of forming the transducer includes depositing a first insulating layer above the magnetic layer, and then selectively etching the first insulating layer by forming an opening in the active region having a cross-sectional profile sloping inwardly toward the magnetic shield layer. Thereafter, an insulating layer is deposited atop the first insulating layer having the opening.