YBa2Cu3O7step‐edge junctions with widths down to 0.5 &mgr;m are fabricated on SrTiO3substrates by Ar ion‐beam milling of the steps, high‐pressure on‐axis magnetron sputtering, electron beam patterning and ion‐beam etching of the microbridge. For ratios of film thickness to step height of ∼1/2 the current‐voltage characteristics show Shapiro steps under microwave irradiation and resistively shunted junction like behavior. The periodic dependence of the critical current upon the magnetic field resembles a Fraunhofer pattern. The period of the current variation &Dgr;B0depends upon the widthwof the junction according to the theoretical prediction for planar thin Josephson junctions: &Dgr;B0=1.84&fgr;0/w2. Junctions with widths of 0.7 &mgr;m possess a large magnetic field stability with &Dgr;B0≊100 G. Small junctions (w<1 &mgr;m) exhibit voltage jumps in the Fraunhofer pattern, which are explained by flux penetration of single vortices into the electrodes. ©1996 American Institute of Physics.