A layer of silicon nitride above the bottom electrode and on the sidewalls of the magnetoresistive stack serves as an insulator and an etch stop during manufacturing of a magnetoresistive device. Non-selective chemical mechanical polishing removes any silicon nitride overlying a top electrode for the device along with silicon dioxide used for encapsulation. Later etching operations corresponding to formation of a via to reach the top electrode use selective etching chemistries that remove silicon dioxide to access the top electrode, but do not remove silicon nitride. Thus, the silicon nitride acts as an etch stop, and, in the resulting device, provides an insulating layer that prevents unwanted short circuits between the via and the bottom electrode and between the via and the sidewalls of the magnetoresistive device stack.