In this paper we discuss recent work on the development of high damage threshold, high efficiency MLD (multilayer dielectric) diffraction gratings for use in high energy, petawatt laser systems. This effort involves a close integration between modeling, fabrication, and testing. The modeling work is used to identify grating designs that satisfy the constraints of high efficiency (>94%) and low field enhancement which is a necessary condition for high damage threshold. Subscale MLD gratings for test are being fabricated in an advanced ion-etch machine we have recently built. The testing effort is being conducted in a dedicated laboratory. The laser beam used to test the samples is based on an OPCPA (optical parametric chirped-pulse amplifier) and a compressor that can provide pulse energies up to 50mJ with pulse lengths variable from 0.3-20 ps. This test station is equipped with diagnostics to fully characterize both the spatial and temporal characteristics of the test beam at the plane of the sample. Initial results have demonstrated a dependence of damage threshold on incident angle that is in good agreement with the field enhancement calculations. We have demonstrated a grating design with a damage threshold of 3J/cm{sup 2} and are investigating manufacturability and reproducibility issuesmore » as well.« less