The low frequency noise observed in giant magnetoresistive (GMR) sensors exhibited a bistability at certain critical values of bias current. As the sensor oscillated between the two states of a bistable system, the power spectral density (PSD) of the noise showed two peaks; a narrow low frequency peak corresponding to twice the average residence time in a bistable system and a broad high frequency peak corresponding to intrawell vibration. The peaks were visible in the PSD even when the bistability was not pronounced in a time trace. The PSD showed deviations from a Lorentzian behavior indicating that the energy minima and the barrier between them depended on the bias current. A simple analytic model was developed to describe the change in the energy of the system with bias current. The model was based on the physical structure of the sensor and the estimated path of current flow. At particular current induced bias field values, the system was described by multiple energy minima permitting thermal noise excitation of the free layer magnetization. © 2006 American Institute of Physics.