This article describes the alignment accuracy of an x-ray stepper that was developed by SORTEC Co. and Matsushita Electric Industrial Co. The quantitative relationship between the phase modulation of an alignment signal and the overlay accuracy is discussed. Phase modulation is caused by multiple reflection of an alignment laser beam between a mask and wafers. The alignment capability of an alignment system can be evaluated from the overlay accuracy near the alignment marks, and is about 20 nm (3 sigma) for alignment on a resist-patterned wafer. The overlay accuracy in an exposure field worsens with increasing distance from alignment marks. The reason behind this is wafer deformation which causes pattern placement offsets characterized by the position on the wafer. By subtracting the offsets, the overlay accuracy of less than 22 nm (3 sigma) is obtained. Following the same procedure, the overlay accuracies for a metalized wafer were 65.2 nm for the x axis and 35.3 nm for the y axis (3 sigma).