Immersion lithography has been proposed as a method of improving optical lithography resolution to 50 nm and below. The premise behind the concept is to increase the index of refraction in the space between the lens and wafer through the insertion of a high refractive index liquid in place of the low refractive index air that currently fills the gap. This paper presents three studies related to potential problem areas for immersion lithography. The first study investigates the entrainment of air as liquid flows over features in the wafer topology. Bubbles are undesirable because they introduce changes in the index of refraction in the optical path that can lead to imaging errors. The second investigation examines liquid heating due to the absorption of the incident energy by the fluid as well as heat transferred from the exposed wafer and viscous heating. This temperature elevation can lead to changes in the liquid's index of refraction which may lead to optical degradation of the fluid. The final investigation examines the potentially significant normal and shear stresses induced on both the lens and wafer surface due to the increased viscosity and density of the liquid as compared with air. These mechanical loads may cause the lens to distort or shift in its mounting. This paper presents the results of the numerical thermal, flow, and structural simulations used to analyze these various critical issues.