A low-cost lithography technology is presented in this paper for fabrication of sub-micron order one-dimensional diffraction gratings. A Lloyd’s mirror interferometer which can generate stable interference fringes is used as fabrication tool. The Lloyd’s mirror interferometer is composed of a mirror and a substrate coated by photoresist, which are placed by nighty degrees. A plane wave is projected onto the Lloyd’s mirror and divided into two halves, one of which is directly projected onto the substrate and the other one reaches the substrate after being reflected by the mirror. These two beam interfere with each other and generate interference fringes, which are exposed onto the photoresist. After being developed, the exposed photoresist shows a one-dimensional surface-relief grating structures. In conventional lithography system based on the principle mentioned above, gas lasers, such as He-Cd laser are widely employed. The cost and footprint of such laser sources, however, are always high and bulky. A low-cost system by using cost-efficient 405 nm laser diodes is then proposed for solving these problems. A key parameter, coherence length that determines one-dimensional grating width is systematically studied. A fabrication system based on the interference lithography principle and 405 nm laser diodes is constructed for evaluation of the feasibility of using laser didoes as laser source. Gratings with 570 nm pitch are fabricated and evaluated by an atomic force microscope. Experiments results show that low-cost 405 nm laser diode is an effective laser source for one-dimensional grating fabrication.