The authors studied a GaAs/Al0.3Ga0.7As hetero-nanostructure etching process, neutral beam (NB) etching with chlorine (Cl-2) and argon (Ar) mix gas. The effect of different mixing ratios of chlorine and argon has been investigated. The results showed that when pure chlorine NB (Cl-NB) was used, the pillar formation problem was observed on the etched surface. By increasing the Ar/(Cl-2+Ar) gas mixing ratio, the pillar can be eliminated and the roughness of etched surface smoothed. As an Ar/(Cl-2+Ar) gas mixing ratio of 78% was used, the root-mean-square roughness of etched surfaces of both GaAs and Al0.3Ga0.7As is about 0.6 nm, which is almost the same as those of as-received samples. Meanwhile, the etching selectivity of GaAs/Al0.3Ga0.7As can be kept close to 1, which would help to etch a clear and smooth profile. Additionally, the high-resolution transmission-electron microscopy image of the GaAs etch profile shows that no crystalline defect was observed on the etched surface. (C) 2010 American Vacuum Society. [DOI: 10.1116/1.3499716]