We present selected results of our feasibility study on ArF Immersion lithography from the viewpoint of the exposure-tool development. First, we show that utilizing finite bubble lifetime in degassed water can eliminate air bubbles that are generated by wafer scanning. Second, it is shown that thermal fluctuation of immersion liquid as well as vectorial diffraction effect from the mask is not significant in terms of imaging performance. Third, we demonstrate resist imaging of 60-nm and 45-nm line-and-space patterns in interferometric exposure experiments with an ArF laser at the power level of the actual exposure tools. Fourth, the increase of the depth of focus is confirmed using an alpha exposure tool of ArF immersion. All these results indicate that the ArF immersion lithography is promising for 65-nm half-pitch node and beyond.