This paper describes studies on the alignment error budgets caused by a through-the-lens TTL alignment system (SMART: separated mark TTL alignment) for excimer laser aligners. Alignment error factors, such as the optical phase fluctuation of the alignment beam, the inclination variation of the alignment incident beam, the tilt of the wafer and the reticle, and the defocus of the reticle, have been analyzed and estimated. It has been demonstrated that the total error of the alignment system is required to be less than 0.02 mu m to satisfy a 0.05 mu m(3 sigma) overlay accuracy. Several compensation methods have been developed and adapted to SMART. As a result, it was found experimentally that the total error of the alignment system was less than 0.02 mu m. SMART in the excimer laser aligner showed excellent performance with an overlay accuracy of better than 0.05 mu m(3 sigma).