Herein, the effect of oil-medium current annealing on GMI characteristics of rotated-dipping Co-based metallic microfibers was investigated systematically. Based on thermophysical parameters of the metallic microfibers (containing glass transition temperature Tg and initial crystallization temperature Tx1), we constructed a steady-state heat conduction model by ANSYS to simulate the temperature field distribution during its oil-medium current annealing process, and further to determine the annealing current intensity range: 50 mA˜300 mA, according to the crystallization degree of cores of microfibers. The experimental results indicated that, in comparison to as-cast Co-based microfibers, the maximum GMI ratio [ΔZ/Zmax]max and the maximum magnetic field response sensitivity ξmax of oil-medium current annealed microfibers were both significantly improved. Among which, [ΔZ/Zmax]max and ξmax of the microfibers annealed at 225 mA can reach 303.1% and 50.6%/Oe, respectively, at the excitation current frequency f =5 MHz, and the maximum response field Hp increased from 1 Oe to 3 Oe. Meanwhile, the magnetic domain arrangement of oil-medium current annealed microfibers became denser, the width of which got smaller, and the transition regions of domain changed into clearer. This improvement of GMI characteristics is closely related to magnetic domain distribution regulated by high-intensity toroidal magnetic field, which was generated during the medium current annealing process. That is, the atomic magnetic moment tends to be closely and orderly adjusted by the combined action of both the magnetic field energy and thermal activation energy.