Magnetic tunnel junction pillars are encapsulated by an oxidized diffusion barrier layer. Oxygen within the encapsulating material is used to oxidize metallic residue outside the pillars, converting the residue to a non-conductive material such as a metal oxide or metal oxynitride. Selective deposition of manganese on the metal layers of the pillars can be followed by oxidation of the manganese to form a manganese oxide diffusion barrier. Alternatively, manganese deposition can be followed by deposition of silicon dioxide and subsequent annealing to form a manganese silicate diffusion barrier.