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(Ni80Fe20)1-xMnx alloy thin films were produced by codepositing Ni80Fe20 and Mn and annealed at 300°C-600°C. In spite of the structural stability predicted by the bulk phase diagram and the interdiffusion evidences observed in the magnetic exchange couples, the (Ni80Fe20)1-xMnx alloy films decomposed into Ni80Fe20 and Mn phases when annealed above 400°C. The phase separated structure closely resembles those of magnetic granular alloys with a strong crystallographic texture. The phase-separated alloys exhibit an inverse giant magnetoresistance as high as 0.5%.