A novel ultra-high vacuum (UHV) compatible dry etch reactor was designed, constructed, and characterized. The etch mechanism is dependent solely on the chemical reactivity of a neutral etchant gas, enhanced by its kinetic energy, and does not utilize any plasma or ion source in obtaining directionality or acceleration. This thesis work is the first reported demonstration of molecular chlorine etch of InP at chlorine pressures of 1x 10-7 torr with no ion, plasma, photon, or e-beam assistance. The etchant gas was accelerated to supersonic speeds through the use of free-jet expansion nozzle coupled with a skimmer in differentially pumped vacuum chambers. By varying the nozzle temperature and the concentration of chlorine in a gas matrix, the energy of the incident beam can be varied. The directionality of the molecular beam produced was maintained by using it in an UHV environment with operating background pressures of 1 x 10-7 torr or lower. As the translationally-activated molecules contribute to collision-induced dissociative chemisorption, a chemical reaction can be initiated in an otherwise unreactive material system. Two quantitative in-situ process monitoring methods were also devised for this work: (1) a surface roughness measurement method using reflected 633 nm wavelength He-Ne laser intensity, and (2) a low-temperature calibration of the substrate holder thermocouple through monitoring the vacuum background pressure increase during the initial stages of substrate temperature ramping. InP and GaAs substrates were etched using a translationally-activated molecular chlorine beam. Both directional and (111) crystallographic preferential etch profiles were observed. The crystallographic preferential etch was the predominant etch profile, while directional etching was achieved when the beam energy was increased. Etch rates ranging from 0.2 pm/hour to 2.0 pm/hour were obtained at substrate temperatures ranging from 2000C to 3500C under various beam energy conditions. Some C1 2-InP etch mechanics are also proposed and discussed in this thesis.