The magnetoresistive response of insoluble Ag/Permalloy bilayer thin film elements made by an annealing process has been investigated. The electron-beam-deposited bilayer thin films are first annealed in an atmosphere containing oxygen, then in hydrogen. By this process, Ag and Permalloy species mix with each other. Although the magnetoresistive response curve shows large hysteresis, the magnetoresistivity reaches a maximum 5.6% from 2.8% of as-deposited film. This increase may be due to spin-dependent scattering of electrons.