A dry‐etching process that produces very smooth facets in the AlGaAs/GaAs material system is described. Chemically assisted ion beam etching (CAIBE) is used to fabricate the facets, with SiO2as the etch‐mask. Reactive ion etching (RIE) is used to transfer the resist pattern to the underlying SiO2layer. RIE operating conditions, including gas type, power density, and etching pressure were characterized to achieve smooth SiO2sidewalls. It is found that CF4etching at low power density of 0.10 W/cm2and low pressure of 1 mTorr produces very smooth SiO2sidewalls. As a result, excellent etched facets are obtained by CAIBE, using SiO2as the etch‐mask. This dry‐etching process is being used to fabricate waveguide diode ring lasers. A self‐aligned etching process, which defines both the ridge and the facets for the ring lasers in the same lithography step, is also discussed.