A vertical x-ray stepper has been developed for 0.2 μm synchrotron orbital radiation lithography. The key features of this prototype stepper are a new gap setting algorithm, an optical heterodyne alignment system, and a newly developed fine motion mask stage. Gap setting is executed so as to make the mask and wafer parallel to the travel plane of the wafer x–y stage so that only one gap setting per wafer is required. The gap setting accuracy between 20 and 50 μm gaps is better than ±1.5 μm (3σ) for each exposure position. The optical heterodyne alignment signal obtained by detecting the diffraction beams from two checkerboard gratings has a detectable resolution of better than 0.01 μm and has only a small dependence of ±0.02 μm on gap variation. The alignment signals are fed back to the mask stage which can align the mask and wafer with a resolution of 5 nm. In exposure experiments, 0.15 μm lines and spaces were printed on a negative resist (SAL 601) and a 0.05 μm overlay accuracy has been obtained.