The present invention is directed to a method for manufacturing spin transfer torque magnetic random access memory (STTMRAM) devices. The method, which utilizes in-situ annealing and etch-back of the magnetic tunnel junction (MTJ) film stack, comprises the steps of depositing a barrier layer on top of a bottom magnetic layer and then depositing an interface magnetic layer on top of the barrier layer to form an MTJ film stack; annealing the MTJ film stack at a first temperature and then cool the MTJ film stack to a second temperature lower than the first temperature; etching away a top portion of the interface magnetic layer; and depositing at least one top layer on top of the etched interface magnetic layer. The method may further include the step of annealing the MTJ film stack at a third temperature between the first and second temperature after the step of depositing at least one top layer.