A magnetoresistive element includes a first and a second shield, and an MR stack disposed between the shields. The MR stack includes a first and a second ferromagnetic layer, and a nonmagnetic spacer layer disposed between the ferromagnetic layers. The first and second ferromagnetic layers have magnetizations that are in directions antiparallel to each other when no external magnetic field is applied to the layers, and that change directions in response to an external magnetic field. An insulating layer is formed to touch a rear end face of the MR stack and the first shield, and a bias magnetic field applying layer is formed above the insulating layer with a buffer layer disposed in between. The bias magnetic field applying layer includes a hard magnetic layer and a high saturation magnetization layer. The high saturation magnetization layer is located between the rear end face and the hard magnetic layer, but not located between the first shield and the hard magnetic layer.