Abstract: In this paper, FDTD method incorporated with periodic boundary condition is applied to solve the near fields for dielectric gratings with plane wave illumination. Then the diffraction characteristics of transmission gratings are analyzed. The size of domain to be solved is restricted to a single cell of the dielectric periodic structure. Owing to the presence of interface of dielectric and air, it is required to impose three waves, including incident plane wave, reflected and transmitted waves at the total-scattered field boundary. The method is applied to study the diffraction characteristics of dielectric gratings with rectangular and trapezoid shapes. The presented scheme is useful to study the diffraction problem of dielectric gratings with arbitrary shape and complicated configuration