The effect of annealing on the microstructure and giant magnetoresistive (GMR) properties of NiO/Co/Cu/Co bottom spin valves is investigated using conventional and high resolution transmission electron microscopy. The value of the GMR of these spin valves is observed to decrease from 12.2 to 2.7 pct after annealing in a vacuum for 30 minutes at 335 °C. This decrease is attributed to an increase in the roughness of the Co and Cu layers. In annealed specimens, grain boundary grooving is also observed in the antiferromagnetic NiO pinning layer at the NiO/Co interface, and the location of these grooves correlates with waviness in the Co/Cu interfaces. An increase in the Néel “orange-peel” coupling between the ferromagnetic Co layers, resulting from the increased roughness of the Co/Cu interfaces, accompanies the degradation of the GMR.