Silicon diffraction gratings fabricated by photolithography and anisotropic chemical etching offer unique advantages over conventional ruled gratings. Previous work showed a high amount of scatter from etched gratings and several waves of wavefront distortion due to an overetch problem. We recently began to study ways to improve the optical performance of etched silicon gratings. Defect etching was used to verify that our starting material was of high quality and that it could be polished to the required optical flatness without producing subsurface damage. We compared the effect of different etch mask materials and etching variables on the scatter and wavefront aberration of test gratings. Gratings masked with silicon nitride achieved sufficiently low wavefront distortion to be useful in high resolution spectroscopy. The scatter was improved by a factor of tow over the grating fabricated several years earlier, but is still a factor of 3 worse thana ruled echelle. A better lithography mask should reduce the scatter. The major issues in fabricating large etched gratings for astronomy are achieving good uniformity across the surface and the compatibility of thick silicon disks with standard semiconductor processing hardware.© (1998) COPYRIGHT SPIE--The International Society for Optical Engineering. Downloading of the abstract is permitted for personal use only.