We report here on a comprehensive study of an alternatingcurrent Joule annealing (ACJA) method for optimizing the giant magnetoimpedance (GMI) effect of Co-rich amorphous wires for sensor applications. Experimental results indicated that the proper ACJA treatment can drastically improve the GMI property of as-cast wire. At 10 MHz, the maximum GMI ratio [DZ/Z 0 ] max of ACJA-ed wire increase to 205.38%, which is nearly 3.3 times that of 62.84% for as-cast wire, and the maxima field response sensitivity j max of ACJA-ed wire increases to 345.90%/Oe by more than twice that of 170.92%/Oe for as-cast wire. With an increase of AC amplitude, a remarkable dependence of GMI performance appears on the microstructural evolution such as the structural relaxation, the degree of local order, as well as circular magnetic domains. Importantly, the atomic order orientation incorporating HRTEM observation and circumferential permeability were effectively increased by the co-action of thermal activation energy and magnetic field energy during ACJA, further to enhance the magnetic properties to some extent. Based on both the numerical calculation of transient temperature rise and GMI behavior, we propose ACJA as an efficient annealing technique to achieve simultaneous best performance of [DZ/Z 0 ] max and j max for potentially magnetic sensor applications in detecting weak magnetic fields.