In this study, high-density plasma etching characteristics of ITO(indium tin oxide) films used for transparent electrode in dispaly devices were investigated. Plasma diagnostic and surface analysis tools were used to understand etch reaction mechanism. The etch rate of ITO was increased by the increase of reactive radicals such as H and $CH_3$ with the addition of moderate amount of $CH_4$ to Ar. However, the addition of excess amount of $CH_4$ decreased possibly due to the increased polymer formation on the ITO surface being etched. The increase of source power and bias boltage increased ITO etch rates but it decreased selectivities over under-layers $(SiO_2, Si_3N_4)$. The increase of working pressure up to 20mTorr also increased ITO etch rates, however the further increased of the pressure decreased ITO etch rates. From the analysis of XPS, a peak related to the polymer of hydrocarbon was observed on the etched ITO surface especially for high $CH_4$ conditions and it appears to affect ITO etch rates.