Vertically aligned nanocomposite (VAN) oxide thin films are unique nanostructures with two-phase self-assembled, heteroepitaxially grown on single-crystal substrates. Both phases tend to grow vertically and simultaneously on a given substrate with lattice matching in the system. The nanostructured thin film system could form different in-plane morphologies including nano-checkerboard, nanopillar in matrix and nanomaze structures. The VAN thin films with tunable vertical lattice strain and novel microstructures provide fascinating approaches to achieve enhanced functionalities. In this dissertation, the microstructure and vertical strain effect on low-field magnetoresistance (LFMR) have been investigated in heteroepitaxial La0.7Sr0.3MnO3 (LSMO):CeO2 and LSMO:ZnO VAN thin films with a vertical strain of 0.13 % and 0.5 %, respectively. We demonstrate that LFMR can be tuned by column width and vertical strain in these VAN systems, i.e., smaller column width and larger vertical strain could result in a larger LFMR in the vertical nanocomposite heteroepitaxial thin films. The physical mechanism of enhanced LFMR in LSMO-based VAN has been explored. Single-phase LSMO and LSMO-based VANs have been grown on different substrates with different secondary phase compositions. Substrate effect in single-phase LSMO films shows that LFMR tends to increase with grain misorientation factor because the cross-section of electron conduction paths reduces as grain misorientation factor increases. (LSMO)1-x:(ZnO)x VAN heteroepitaxial films without large angle grain boundary (GB) have been used to study the pure phase boundary (PB) effect on the LFMR. It shows that increased PBs tends to reduce the cross-section of the conducting path and thus favor the spin-dependent tunneling in nanomaze structures with ferromagnetic/insulating/ferromagnetic vertical sandwiches. Tilted aligned LSMO nanostructured films with artificial GBs have been designed to investigate pure GBs influence on LFMR. The results indicate that decoupling of neighboring ferromagnetic (FM) domains by artificial GBs is necessary to achieve enhanced LFMR properties; and the strength of the GBs can be controlled by post-annealing to tune the LFMR effect. The VAN heteroepitaxial films display excellent microstructure compatibility and strain tuning. Perovskite oxides can be combined with many other oxide materials to form VAN architectures. The microstructure and lattice strain in the unique heteroepitaxial VANs can be used to engineer and tune the existing/new functionalities.