Microscopy is used in most technology processes where two-dimensional distributions, that are digital images of the shape and appearance of integrated circuit (IC) features, reveal important information. Optical microscopy and diffraction gratings can be used to measure the placement of IC features with a precision of less than 1 nm (1σ) with a new technique of separately viewing multiple levels. However, the microscope’s optical and video camera distortion may cause significant errors in the IC feature measurement under some circumstances. In this paper, the optical and video camera distortions of an optical microscope used in IC feature measurement were studied by analyzing digital images of a precision grating. MATLAB programs were used to extract the value of intensity of each pixel in the grating image. By matching a position dependent, phase-varied ideal sinusoidal wave to the processed grating digital image, the phase of the best-fit sine wave was observed to vary by the equivalent of many nanometers at different locations within the digital image of the grating. This variation was similar, but significantly different, for different microscope objectives. It is believed to arise from optical distortion within the microscope, and possibly also from distortion within the camera. Impact of optic chromatic aberration and microscope stability on the measurement of IC features was also studied. The method described here is inexpensive and easy to implement since it does not require any sophisticated equipment or controlled environment. This technique provides an attractive option for small companies, university labs and instrument manufacturers.