We demonstrate the application of a high-sensitivity alignment method called interferometric-spatial-phase imaging (ISPI) to a nanometer-level overlay in fluid-immersion lithography, using step-and-flash imprint lithography as the test vehicle. As a stringent test we used alignment marks that consist of pure phase gratings in a fused silica template, immersed in a fluid of similar refractive index, resulting in a low-contrast alignment signal. Feedback control of alignment is demonstrated with mean = 0.0 nm and sigma = 0.1 nm using an immersed template. Overlay results, with UV-exposed imprint fluid, were limited to similar to 4 nm, due to a mechanical disturbance. Because ISPI enables continuous monitoring of the alignment signal, we were able to identify the origin of the mechanical disturbance and can eliminate it in future experiments. In addition, we demonstrate the ability to actively reduce misalignment during the progression of crosslinking in the imprint fluid. (c) 2005 American Vacuum Society.