Disclosed is a spin-valve sensor disposed between first and second gap layers and formed of one or more in-situ oxidized films. The improved spin valve sensor helps eliminate electrical shorting between the spin-valve sensor and shield layers. A fabrication method of the gap layers comprises repeatedly depositing a metallic films on a wafer in a DC-magnetron sputtering module of a sputtering system, and then transferring the wafer in a vacuum to an oxidation module where in-situ oxidation is conducted. This deposition/in-situ oxidation process is repeated until a designed thicknesses of gap layers is attained. Smaller, more sensitive spin-valve sensors may be sandwiched between thinner gap layers formed of in-situ oxidized films, thus allowing for greater recording data densities in disk drive systems.