In this paper, we present the improvement of optical properties of 1x8 arrayed waveguide grating (AWG) de-multiplexer by adding Transmission Star Couplers (TSC) into Free Propagation Region 1 (FPR1) which has refractive index 1.455. It is found that the appropriate value of refractive index of TSC area is 1.460. Using this method, the insertion loss of AWG decreased from 1.79 dB to 1.58 dB while the crosstalk increased from -23.94 dB to -22.49 dB. To maintain the problem of the increased crosstalk, the traditional output guide structure is replaced by a taper structure which has start width 11 μm and end width 6 μm. Then, the insertion loss is reduced from 1.58 dB to 1.09 dB, and the crosstalk is reduced from -22.49 dB to -24.94 dB, respectively. Therefore, by using all design concepts, the appropriate structure of proposed AWG can be achieved. The size of the proposed AWG is the half of that of the traditional AWG, and the insertion loss of the proposed AWG is lower than that of the traditional AWG. © 2012 IEEE.