Abstract— In recent years, reducing the number of TFT‐manufacturing steps has become an unavoidable technology development stream for all TFT‐LCD makers for the purpose of cost reduction. In this paper, an advanced photomask‐process‐reduction technique, a three‐mask TFT process, by chemical lift‐off which is inherent of the conventional four‐mask TFT fabrication process, is proposed. The major feature of this three‐mask technique is the combining of the passivation‐layer and pixel‐electrode formation within one photolithography process. A new halftone mask (HTM) design has been applied to the photolithography process. With this new HTM design, a small SiNx island bridge was formed, located at the TFT source contact‐edge border. And it provided an ITO pixel electrical conducting path and avoided the undercut issue where ITO breaks from the gate insulator (GI). In order to enhance the chemical lift‐off efficiency, different process and structure designs were also implemented and introduced. Furthermore, a new laser lift‐off technology was adopted to improve the ability of ITO lift‐off. By using this new laser lift‐off technology, unnecessary ITO film could be easily lift‐off before photoresist stripping. Finally, the first HTM lift‐off panel was successfully demonstrated by using our new three‐mask TFT design scheme.