The anisotropic magnetoresistance of dc magnetron-sputtered Ni80Fe20 permalloy films showed the evolutionary transition of the sign, from the negative magnetoresistance to the positive magnetoresistance (PMR), as the thickness increases. A similar phenomenon with the angle between the field and the current was recently reported. In our study, however, the transition occurred in the transverse measurement at the fixed angle of 90°. Ni80Fe20 films were deposited on Si substrates in a magnetic field of 300 Oe at the ambient temperature and at the deposition rate of 4 Å/s. Because the PMR was known to be peculiar to the longitudinal measurement, it was investigated why the PMR in the transverse measurement occurred. By a vibrating sample magnetometer and magnetic force microscope, the PMR curve in the transverse measurement was found to be related to the canted hysteresis loop peculiar to the stripe domains caused by the perpendicular anisotropy. Unanticipated magnetostrictive strain by the compositional fluctuation and/or the effect of surface roughness was suggested as a plausible mechanism of the perpendicular anisotropy. © 1999 American Institute of Physics.