Co-Ag granular films having various Co grain sizes are prepared by rf sputtering under various sputtering conditions. The Co grain sizes are derived from the magnetization curves by dividing them into ferromagnetic and superparamagnetic components. As the Co content decreases, the radii of the superparamagnetic Co grains, r g , decrease and the distances between the Co grains, t g , increase. The magnetoresistance is proportional to the volume density of superparamagnetic grains or related to kr g 3 exp(Ϫt g /l) with kϭ3.8ϫ10 2 ⍀/cm 2 and lϭ20 Å, implying that the giant magnetoresistance is caused by the spin-dependent scattering in the inner part of the superparamagnetic Co grains as well as at the grain surfaces. Furthermore, it is found that the extraordinary Hall effect arises mainly from the side jump mechanism, and that significant perpendicular magnetic anisotropy appears in the Co composition range between 40 and 70 at %.