This Small Business Innovation Research Phase II project will conduct the research necessary to design and develop a fully functional non-destructive evaluation (NDE) system based on sensors made with giant magnetoresistance (GMR) materials. Phase I research demonstrated that an NDE system based on such sensors has vastly superior performance to current NDE techniques. Using a simple, low cost sensor and electronics system, and a proprietary analytical technique, it was possible to detect creacks with widths in the 20 microns to 100 microns range in both aluminum and steel sheets, with signal-to-noise (S/N) ratios exceeding 100. Of even greater importance, tests with an aircraft section showed it was possible to detect cracks beneath overlying sheets of metal, and under rivet heads at high S/N levels. These results indicate the new technology will represent a major advance in NDE capability, with considerable implications for safety, efficiency and cost savings. As both the age and complexity of the nation's transportation and civil structures increase, the importance of improved NDE technology is amplified. Due to the lack of appropriate technology, many existing in-service inspection (ISI) programs are conducted using visual inspection only. This high-sensitivity, deeply penetrating electromagnetic sensor would provide rapid, cost-effective inspection for embedded defects in electrically conductive structures including commercial and military aircraft, pressure vessels and pipelines.