An annealing process for a TMR or GMR sensor having an amorphous free layer is disclosed and employs at least two annealing steps. A first anneal at a temperature T1 of 200° C. to 270° C. and for a t1 of 0.5 to 15 hours is employed to develop the pinning in the AFM and pinned layers. A second anneal at a temperature T2 of 260° C. to 400° C. where T2>T1 and t1>t2 is used to crystallize the amorphous free layer and complete the pinning. An applied magnetic field of about 8000 Oe is used during both anneal steps. The mechanism for forming a sensor with high MR and robust pinning may involve structural change in the tunnel barrier or at an interface between two of the layers in the spin valve stack. A MgO tunnel barrier and a CoFe/CoB free layer are preferred.