We have investigated in situ etching of 4H SiC in a horizontal hot-wall CVD reactor. A small amount of HCl is introduced together with the major etching gas, H-2. The etch rate is found to increase with temperature and decrease with pressure. An increased H-2 flow proportionally increases the etch rate. The etch mechanism is proposed from the etch rate dependencies on the etch parameters. The morphology both after the etch and after the subsequent growth is investigated and the optimized etch conditions for good morphology are established. The correlation between the morphology and the etch mechanism is pointed out.