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Abstract: Towards a novel magnetoresistance (MR) device with a carbon nanotube, we propose ``nonmagnetic metal/zigzag nanotube encapsulating magnetic atoms/nonmagnetic metal'' junctions. We theoretically investigate how spin-polarized edges of the nanotube and the encapsulated magnetic atoms influence on transport. When the on-site Coulomb energy divided by the magnitude of transfer integral, $U/|t|$, is larger than 0.8, large MR effect due to the direction of spins of magnetic atoms, which has the magnitude of the MR ratio of about 100%, appears reflecting such spin-polarized edges.