This paper describes a new technical approach to IC lithography characterization by using phase-contrast latent image metrology. Latent images of exposed, undeveloped photoresist observed by the dielectric discontinuity microscope (DDM) can be used for rapid, accurate, and optimal characterization of microlithography processes. Typically, the latent image can not be observed by standard bright-field microscopy. The DDM provides a phase contrast image, in which any optical path difference is changed to contrast enhancement of the image; therefore, the photochemical transformation of photoresist due to exposure (optical thickness change) can be easily observed. A distinctive latent image of an I-line stepper has been observed down to 0.6 μm feature size, while that of E-beam direct writing down to 0.2 μm. The 660 nm viewing wavelength does not damage the photoresist during observation. Line width variation has been measured as a function of exposure energy and shows strong relationship between latent images and fully developed photoresist images. Contrast of a latent image has been compared as a function of exposure energy and defocus for various line/space patterns, respectively. From these experiments, the optimal exposure energy and depth of focus (DOF) can be decided along with corresponding development procedure. This is critical for rapid and accurate submicron lithography optimization because latent image calibration can eliminate secondary effects resulting from post exposure development processing and can also exclude laborious and time-consuming SEM inspection which are routinely performed in a typical lithography calibration. Digital signal processing software has been implemented in the DDM video images with on-line CD measurement capability. Measuring an average contrast on a specific window region along with other image process functions allows fully quantitative evaluation of the microlithography.