We have investigated the relationship between the giant magnetoresistance (GMR) and the microstructure in sputter-deposited Cu-Co heterogeneous alloy films. MR varies depending on Co concentration, x, and it shows a maximum around x = 20 at.%Co. The transmission electron microscopy and nuclear magnetic resonance measurements reveal that the size of Co particles and the compositional profile near the interfaces of Co particles do not depend on x. The magnetization measurements suggest that the particle density increases with increasing x, When the particle density is too high, the ferromagnetic coupling between Co particles is dominant, resulting in a reduction in MR. The particle density fox x similar to 20 at.%Co is considered to be optimum for GMR.