The reduction of roughness, without introducing damage, of thin-film surfaces in giant magnetoresistance (GMR) applications will be essential in the development of advanced devices. Tools and methods to accomplish this are limited at present. Gas-cluster ion beam (GCIB) technology shows promise as a dry, low-temperature process that can provide substantial improvement, and can be integrated into GMR-film deposition-and-etch tools. In this work, we describe recent GCIB technique developments and processes for tantalum, alumina, permalloy, and other relevant materials. With argon GCIB it is possible to reduce the roughness of many films to well below a nanometer (root-mean-square), with the roughness falling exponentially with cluster dose. Prototype magnetic films for evaluation were fabricated on GCIB-smoothed alumina gap layers. Transmission electron microscopy revealed changes in roughness and grain morphology that may be correlated with magnetic properties.