The effects of annealing on the structural, magnetic, and magnetotransport properties of melt-spun Co10Cu90granular alloys were investigated. The interaction effects were studied from both remanent magnetization and magnetotransport data, using two different methods to reach the demagnetized state, ac and dc demagnetization. The analysis of the structural evolution and interaction strength between the magnetic clusters clearly shows the role of some structural parameters (particle size and density, interparticle distance) and the degree of magnetic correlation in the magnetic field response of the resistance in these inhomogeneous systems. ©1997 American Institute of Physics.