An improved stepped etalon comprises a transparent body having a stepped surface. The lands of the steps are separated by a non-abrupt or softened transition region. This reduces the diffraction of light caused by the step transitions, thereby reducing the dead spot behind the step transition portions where interference prevents accurate measurements of light transmission from being made. Methods for producing a smoothly stepped etalon and for smoothing the step transitions in an abruptly stepped etalon are also disclosed.