A magnetoresistive sensor having a lead overlay defined trackwidth and a pinned layer that extends beyond the stripe height defined by the free layer of the sensor. The extended pinned layer has a strong shape induced anisotropy that maintains pinning of the pinned layer moment. The extended portion of the pinned layer has sides beyond the stripe height that are perfectly aligned with the sides of the sensor within the stripe height. This perfect alignment is made possible by a manufacturing method that uses a mask structure for more than one manufacturing phase, eliminating the need for multiple mask alignments. The lead overlay design allows narrow, accurate trackwidth definition.