A method and system for manufacturing a spacer layer in a magnetoresistive element are described. The spacer layer resides between a free layer and a pinned layer. The method and system include providing a first metallic layer and oxidizing the first metallic layer in a first environment including at least oxygen and a first gas inert with respect to the first metallic layer. The method and system further include providing a second metallic layer and oxidizing the second metallic layer in a second environment including at least oxygen and a first gas inert with respect to the first metallic layer.