We report on the optical characterization of an ultrahigh diffraction efficiency grating in a first-order Littrow configuration. The apparatus used was an optical cavity built from the grating under investigation and an additional high-reflection mirror. The measurement of the cavity finesse provided precise information about the grating's diffraction efficiency and its optical loss. We measured a finesse of 1580 from which we deduced a diffraction efficiency of (99.635 +- 0.016)percent and an overall optical loss due to scattering and absorption of just 0.185percent. Such high-quality gratings, including the tool used for their characterization, might apply for future gravitational wave detectors. For example, the demonstrated cavity itself presents an all-reflective, low-loss Fabry-Perot resonator that might replace conventional arm cavities in advanced high-power Michelson interferometers.
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