A magneto-resistive effect element (MR element) has an upper shield that is magnetized in a cross track direction, a lower shield that is positioned at an interval relative to the upper shield in a down track direction, and a multilayer film that is positioned between the upper shield and the lower shield and that faces an air bearing surface (ABS). The multilayer film has a free layer where its magnetization direction fluctuates relative to an external magnetic field, a pinned layer where its magnetization direction is pinned against the external magnetic field, a nonmagnetic spacer layer that is positioned between the free layer and the pinned layer, and an insulating layer that is positioned at a back side of the free layer viewed from the ABS. The MR element further has a pair of side shields that are positioned at both sides of the free layer and the insulating layer in a cross track direction. The side shields contact the upper shield on the sides of the free layer and the insulating layer in the cross track direction.