We review the development of low parasitic capacitance sub-micrometer cross-type Josephson tunnel junctions for their use in highly sensitive and field-stable SQUID magnetometers. The potential of such junctions is shown on I–V characteristics as well as on Fraunhofer diffraction patterns. The evaluation of Fiske steps lead to a specific junction capacitance of about 62 fF/μm2 for a critical current density of about 1.7 kA/cm2. The avoidance of any idle-region – the undesired overlap between superconducting electrodes around the junction – due to a self-aligned junction definition process lead to highly sensitive SQUIDs; multiloop SQUID magnetometers exhibiting exceptionally low magnetic field noise levels as low as 0.3 fT/Hz1/2, as well as large usable voltage swings of more than 150 μVpp. Furthermore, junction dimensions in the sub-micrometer range allowed for very high tolerable background fields during cool-down of up to 6.5 mT. In operation mode, the SQUID magnetometers recovered completely from magnetization pulses of up to 76 mT. With respect to their easy and reliable usage as well as their high sensitivity, the presented SQUID sensors are adequate for many applications, like in geophysics, biomagnetism or low-field magnetic resonance imaging.