A novel magnetoresistive transducer, sensitive to magnetic field gradients, has been analyzed for use as a read transducer in magnetic recording systems. The device uses two thin-film magnetoresistive elements separated by a thin, nonmagnetic insulating layer. A theoretical analysis shows that the magnetoresistive elements can be biased and sensed to reduce common-mode noise while maintaining sensitivity to magnetic field gradients. An experimental transducer was fabricated, showing nonmultidomain elements that eliminated Barkhausen noise. Effects due to thermal drift were reduced by more than 10 dB, stress effects were undetectable, and uniform field rejection was almost 20 dB. Gradiometer operation of the device was confirmed using a magnetic recorded transition. >