We have achieved excellent exchange decoupling of grains in CoPd multilayers by annealing in air at 300 C. Samples exhibit a slope in the hysteresis loop close to 1.0, nucleation fields as large as 1.1 T, and coercivities as large as 1.6 T. These are among the best properties ever achieved for CoPd multilayers. In samples of the general type seed layer\(0.3 nm Co\1 nm Pd) x 15\capping layer, it appears that atoms diffuse rapidly up and down the grain boundaries at 300 C. From x-ray photoelectron and Auger depth profiling, it appears that we have found a novel effect: when Co atoms arrive at the surface they become oxidized and remain at the surface, leaving the grain boundaries depleted in Co and apparently nonmagnetic. If the annealing is carried out in vacuum, exchange decoupling of the grains does not occur. This result supports our conclusion that the presence of oxygen plays a crucial role. When Au or Pt atoms are present in the seed layer or capping layer, they diffuse into the CoPd grain boundaries and apparently enhance the exchange decoupling of grains.