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The correlation between the structural and magnetic properties in Ni80Fe20/Co-oxide bilayers that were prepared using a dual-ion beam deposition technique has been investigated. The pure Permalloy (Ni80Fe20) film (a = 3.53 Å) consisted of face-centered cubic nanocrystallites. Films prepared with 8% O2 and 34% O2 in the assist beam consisted of rock-salt CoO (a = 4.27 Å) and spinel Co3O4 (a = 8.21 Å). The composition and oxidation state of the Co-oxide layers were analyzed with X-ray photoelectron spectroscopy (XPS), X-ray diffractometry (XRD), and transmission electron microscopy (TEM). Magnetic force microscopy (MFM) revealed that the Ni80Fe20/Co bilayer exhibited ripple domains, whereas cross-tie domain walls were found in Ni80Fe20/CoO bilayer. At 289 K, the pure Permalloy film exhibited soft magnetic properties while a magnetic hardening with enhanced coercivity was observed in the Ni80Fe20/CoO bilayer. Additionally, the Ni80Fe20/CoO bilayer exhibited an exchange shift Hex∼-75 Oe at 150 K.