The effect of surface roughness on magnetoresistance (MR) and magnetic properties of Ta/NiFe films is investigated as a function of surface roughness and NiFe thickness. The surface roughness effects on the MR ratio, Delta rho/rho, of Ta/NiFe films can be separated into two different regimes. In regime I, Delta rho/rho of NiFe films linearly decreases with increasing roughness mostly due to the increase in resistivity of NiFe, while Dr remains constant. In regime II at increased roughness, domain wall pinning is induced by surface roughness causing a degradation of the uniaxial anisotropy of NiFe and leading to the decrease in Delta rho, resulting in the steeper MR ratio decrease. The change in MR properties of NiFe films with varying thicknesses can be correlated with the change in surface resistivity, rho(s). Strongly textured NiFe(111) grown onto smooth substrate yields higher anisotropy and lower coercivity than those deposited onto rough substrates over a wide range of NiFe thicknesses. (C) 1999 American Institute of Physics. [S0021-8979(99)26108-7].