Partially segregated La0.7Sr0.3MnO3 (LSMO) nanocomposite films are shown to exhibit a thickness dependent self-assembled structure. The morphological evolution of the nanocomposite and the misfit strain of the LSMO phase are linked through the topological distribution of La–Sr oxide nanodots within the film. Misfit relaxation occurs above a critical thickness, hc, coinciding with the nucleation of La–Sr oxide nanodots at the film-substrate interface. Below hc, the same dots outcrop the film surface, forming islands. As a consequence of this misfit relaxation mechanism, an enhancement in the magnetoresistance with increasing thickness is measured.