We have developed our next generation Nb integrated circuit process which offers higher performance, particularly for SFQ-type logic, and increased density compared to our present 2000 A/cm/sup 2/ foundry process. The new process is based on our existing Nb foundry process, but has been optimized to utilize more of the sub-micron alignment and exposure capabilities of our optical lithography tools. Minimum linepitch and junction size have been reduced to 2.5 /spl mu/m (from 4 /spl mu/m) and 1.75 /spl mu/m (from 2.5 /spl mu/m), respectively, and J/sub c/ has been increased to 4000 A/cm/sup 2/. These goals have been achieved by an overall reduction in layer thicknesses, implementation of SF/sub 6/ dry etch for metal line definition, and optimization of the photolithography process. The new process offers lower inductance wiring and substantially lower parasitic circuit inductances compared with the existing Nb foundry process. In this paper, we discuss these improvements and report parametric test data for devices fabricated in this process.