KrF and ArF excimer laser lithography are considered to be candidates for a next lithography tool to achieve a miniaturization below quarter micron. To improve the focus latitude and overlay accuracy, an in-house KrF excimer laser stepper with off-axis illumination has been developed. This developed system can successfully resolve 0.2 mum features using off-axis illumination combined with an in-house developed positive chemically amplified resist and can also attain overlay accuracy of better than 60 nm using heterodyne holographic alignment. Reducing the optical absorption of the resist and the lens material at 193 nm was a challenge. The newly developed 193 nm resist contains no aromatic groups, and the designed projection lens has aspherical elements to establish ArF excimer laser lithography.