A tunnel junction magnetoresistive sensor having improved TMR performance (dR/R) and improved area resistance. The sensor includes a barrier layer sandwiched between a magnetic pinned layer structure and a magnetic free layer structure. The barrier layer includes a thin layer of Mg and a layer of MgOx. The barrier layer could also include a second thin layer of Mg such that the MgOx layer is sandwiched between the first and second Mg layers.