The development phase of the optical photolithography process has long been considered the most crucial, as it is the final image-forming step. Process monitoring methods have focused primarily on end point detection and have not used other inferable on-line information. This paper examines the use of mathematical models in conjunction with on-line development penetration data to determine process changes. An on-line sequential parameter identification scheme is used to calculate a current rate parameter value for the development model, and a Kalman filter is used to reduce erroneous observations caused by measurement noise. A powerful development monitor system results from the combination of real-time data, and on-line parameter and state estimation theory.