This paper reports fabrication of epitaxial Si/SiGe/Si-type optical waveguides with a well-controlled refractive index difference between the core and the cladding and with low transmission losses. A SiGe strip with a cross-section in the range of 0.5 mum x 0.5 mum-5 mum x 5 mum was formed on the Si substrate. Then, a Si upper cladding layer was deposited. Some samples incorporated a compositionally graded layer between the SiGe core and the Si cladding layer. The fabricated structures show that the index contrast, Deltan, increases linearly with the increasing Ge atomic concentration x in the Si1-xGex cores (Deltan = alphax, where alpha = 1 at a wavelength of 0.633 mum). We determined waveguide transmission losses by measuring the ratio between the input and output optical power values through straight waveguides of different lengths. For waveguides with an index contrast (Deltan/n) of 0.6% between the Si0.98Ge0.02 core and the Si cladding, the loss value for the wavelength at 1.55 mum was approximately 0.31 dB/cm. Structures with a graded layer show higher loss values than those without, which may be attributed to the asymmetric Ge grading in the horizontal and vertical directions. No measurable polarization dependence of the losses has been detected in waveguides, in agreement with the results of X-ray diffractometry that has shown relaxation of the Si0.98Ge0.02 on Si. (C) 2003 Elsevier B.V. All rights reserved.