A particle image velocimetry (PIV) system has been developed to measure velocity fields with order 1-mu m spatial resolution. The technique uses 200 nm diameter flow-tracing particles, a pulsed Nd:YAG laser, an inverted epi-fluorescent microscope, and a cooled interline-transfer CCD camera to record high-resolution particle-image fields. The spatial resolution of the PIV technique is limited primarily by the diffraction-limited resolution of the recording optics. The accuracy of the PIV system was demonstrated by measuring the known flow field in a 30 mu m x 300 mu m (nominal dimension) microchannel. The resulting velocity fields have a spatial resolution, defined by the size of the first window of the interrogation spot and out of plane resolution of 13.6 mu m x 0.9 mu m x 1.8 mu m, in the streamwise, wall-normal, and out of plane directions, respectively. By overlapping the interrogation spots by 50% to satisfy the Nyquist sampling criterion, a velocity-vector spacing of 450 nm in the wall-normal direction is achieved. These measurements are accurate to within 2% full-scale resolution, and are the highest spatially resolved PIV measurements published to date.