A magnetoresistance effect element is composed of a first ferromagnetic layer, a second ferromagnetic layer, and at least one nano-contact portion formed between the first and second ferromagnetic layers, which are formed on the same plane on a substrate. The nano-contact portion has a maximum dimension of not more than Fermi length of a material constituting the nano-contact portion. A permanent magnet layer or in-stack bias layer may be further formed on the first and/or second ferromagnetic layer.