Thin film multilayer structures consisting of two permalloy layers separated by Ag spacers show little or no giant magnetoresistance in their as‐deposited state, due to a predominantly ferromagnetic interlayer exchange coupling that does not oscillate in sign with variations in the Ag spacer thickness. Upon patterning these films into arrays of dots and other geometries with micron scale features, however, antiferromagnetic coupling and giant magnetoresistance are observed due to magnetostatic interactions between layers that are induced at the edges of the patterns. In this letter we present our experimental results and discuss their relevance as magnetoresistive sensors for magnetic recording heads and other applications. ©1995 American Institute of Physics.