Feature size dependence in Ar/Cl2 chemically assisted ion beam etching of InP-based photonic crystals (PhCs) and its influence on the optical properties of PhC devices operating in the band gap are investigated. The analysis of the measured quality factors, the determined mirror reflectivities, and losses of one-dimensional Fabry–Pérot cavities clearly demonstrates the importance of feature-size dependent etching. The optical properties show a dramatic improvement up to a hole depth of about 3.5 µm that is primarily due to a significant reduction in extrinsic losses. However, beyond this hole depth, the improvement is at a lower rate, which suggests that extrinsic losses, although present, are not dominant.