Research in nondestructive evaluation is constantly increasing the sensitivity of detection of small cracks embedded deep in layered aircraft structures. Pulsed eddy-current (PEC) techniques using coil probes have shown considerable promise in detection and characterization of buried cracks in multilayered structures. In this paper, we describe the design and development of a nondestructive inspection system that uses pulse excitation of a planar multiline coil to generate a transient field that is detected via a giant magnetoresistive (GMR) field sensor. An analysis algorithm using features in time and frequency domain processes the experimentally measured signals for automatic detection of small cracks under fasteners in multilayered structures at a depth of up to 10 mm.