We studied the characteristics of annular phase gratings as spatial frequency filters. We first calculated the Fraunhofer diffraction patterns of annular gratings and then got the modulation transfer function (MTF) from the zeroth order Hankel transform of the intensity distribution function. Binaryphase annular grating shows higher diffraction efficiency than binary phase rectangular grating. But the MTF decreases linearly in the low-frequency region as that of rectangular grating does. The diffraction pattern of 4-phase annular grating is similar to that of 2-phase grating and hence MTFs of the two are much alike. For 8-phase annular grating, the 7th order diffracted beam is the lowest one next to the first. Consequently, the diffraction efficiency is very high and the MTF graph is curved upward. The diffracted beams except the first order are negligible and hence the MTF characteristics are more improved in the case of 16-phase grating. But the degree of improvement becomes lowered c(Impaled with 8-phase grating. We made a 16-phase annular grating and measured its MTF. The experimental result agrees well with the calculated one.