Unshielded spin-valve sensors were fabricated and annealed to study the effect of high temperature processing on the transfer curves. A micromagnetic simulation program was developed to analyze the changes observed on the transfer curves upon annealing. Analysis of experimental data versus the micromagnetic simulations indicates two causes responsible for the progressive loss of the MR signal upon annealing above the blocking temperature: a rotation of the pinned layer magnetization from the transverse to the longitudinal direction (along the sensor trackwidth) and an increase of the free layer anisotropy. Rotation of the free layer easy axis can also be observed. Cool down in a magnetic field can prevent this MR loss by pinning the magnetization direction during the high temperature stage.Index Terms-Magnetic recording/reading heads, magnetoresistive materials and devices, micromagnetic simulations, spinvalve sensors, thermal stability.