Ta/NiFe/Ta ultrathin films with and without nano-oxide layers (NOLs) were prepared by magnetron sputtering followed by a vacuum annealing process. The influence of NOLs on the magnetoresistance (MR) ratio of ultrathin permalloy films was studied. The results show that the influence of grain size and textures on the MR ratio becomes weak when the thickness of the NiFe layer is below 15 nm. A higher MR ratio was observed for the thinner (< 15 nm) NiFe film with NOLs. The MR ratio of a 10 nm NiFe film can be remarkably enhanced by NOLs. The enhanced MR ratio for these ultrathin films can be attributed to the enhanced specular reflection of conduction electrons.