Three-dimensional nanostructure fabrication for optoelectronic and quantum-effect devices can benefit from the greatly improved surface layer quality and low contamination offered by all vacuum processing. Ultrathin epitaxial layers can be grown with excellent uniformity and interface quality with techniques such as molecular beam epitaxy (MBE) to produce two-dimensional confinement structures. What has been lacking is a lateral patterning method which is compatible with dimensions required for quantum confinement and the high vacuum crystal growth environment. Surface contamination and damage produced during processing become a much more serious problem with feature sizes in the range of 100 nm and below. The usual lithographic processes involve exposure to produce a chemical change in a polymer resist with photons or electrons resulting in a pattern but also introduce surface contamination incompatible with epitaxial overgrowth. A number of high resolution vacuum compatible patterning techniques are possible with finely focused ion beams due to their unique ability to deliver momentum as well as energy to a target. We have developed in situ patterning process for InP-based compounds in which a focused ion beam is used to pattern a very thin (20-30-angstrom) surface oxide layer. The mask pattern is then transferred into the substrate by dry etching of a Cl2 atmosphere at 200-degrees-C with or without the assistance of a broad area Ar ion beam. Results of experiments exploiting the oxide masking for the pattern formation on InP will be presented, including in situ formation and removal of the mask, and regrowth performed on patterned layers.