High-resolution spectroscopy at energies below 1 keV covers the lines of C, N, O, Ne and Fe ions, and is central to studies of the Interstellar Medium, the Warm Hot Intergalactic Medium, warm absorption and outflows in Active Galactic Nuclei, coronal emission from stars, etc. The large collecting area, long focal length, and 5 arcsecond half power diameter telescope point-spread function of the International X-ray Observatory will present unprecedented opportunity for a grating spectrometer to address these areas at the forefront of astronomy and astrophysics. We present the current status of a transmission grating spectrometer based on recently developed high-efficiency critical-angle transmission (CAT) gratings that combine the traditional advantages of blazed reflection and transmission gratings. The optical design places light-weight grating arrays close to the telescope mirrors, which maximizes dispersion distance and thus spectral resolution and minimizes demands on mirror performance. It merges features from the Chandra High Energy Transmission Grating Spectrometer and the XMM-Newton Reflection Grating Spectrometer, and provides resolving power R = E/ ΔE = 3000 - 5000 (full width half max) and effective area >1000 cm2 in the soft x-ray band. We discuss recent results on ray-tracing and optimization of the optical design, instrument configuration studies, and grating fabrication.© (2010) COPYRIGHT SPIE--The International Society for Optical Engineering. Downloading of the abstract is permitted for personal use only.