Especially in the field of automotive applications smart sensor systems for magnetic field sensing face increasing requirements concerning low cost, low power consumption and high magnetic performance. Over the past years AMR sensors play a decisive role in this application area because of their robustness and stability. In the following a high-integrated smart sensor system for magnetic field sensing is presented. A novel approach for the detection of weak magnetic fields is shown, which is based on an AC-excitation of AMR elements. In contrast to common used sensors this concept is based on a nonlinear AMR element without Barber pole construction. By means of this methodology sensitivity as well as temperature and life time stability is significantly improved, while the production costs compared to common-used sensors are reduced. Within this novel approach new signal conditioning algorithms and analog circuit topologies are presented, which are able to meet low offset and low noise requirements.