An exposure apparatus for exposing a substrate with illumination light, the apparatus comprising: a projection optical system for projecting the illumination light onto a substrate arranged below the projection optical system; a frame structure configured to support the projection optical system; a plurality of grating members (39Y 1, 39Y 2, 39X 1, 39X 2) each of which has a reflecting-type grating portion (37, 38), each of which being supported by the frame structure such that the grating portion is arranged substantially parallel with a predetermined plane perpendicular to an optical axis of the projection optical system; a stage having a holder configured to hold the substrate and being movable below the grating members, the holder being provided within a concave portion formed in an upper surface of the stage; and an encoder system having a plurality of heads (64, 66) provided at the stage, each of which being configured to irradiate a beam onto the grating portion from below the grating portion, so as to obtain position information of the stage, characterised in that: each of the heads is provided at the stage so as to be arranged outside of the upper surface of the stage, with reference to a direction parallel to the predetermined plane; a nozzle unit is provided at a lower end side of the projection optical system, having an opening through which the illumination light passes, and configured to form an immersion area with liquid between the projection optical system and a portion of the substrate held by the stage at a position opposite to the projection optical system; the grating members are arranged outside of the nozzle unit; and the exposure apparatus is configured to expose the substrate with the illumination light via the projection optical system and a liquid of the liquid immersion area. a projection optical system for projecting the illumination light onto a substrate arranged below the projection optical system; a frame structure configured to support the projection optical system; a plurality of grating members (39Y 1, 39Y 2, 39X 1, 39X 2) each of which has a reflecting-type grating portion (37, 38), each of which being supported by the frame structure such that the grating portion is arranged substantially parallel with a predetermined plane perpendicular to an optical axis of the projection optical system; a stage having a holder configured to hold the substrate and being movable below the grating members, the holder being provided within a concave portion formed in an upper surface of the stage; and an encoder system having a plurality of heads (64, 66) provided at the stage, each of which being configured to irradiate a beam onto the grating portion from below the grating portion, so as to obtain position information of the stage, characterised in that: each of the heads is provided at the stage so as to be arranged outside of the upper surface of the stage, with reference to a direction parallel to the predetermined plane; a nozzle unit is provided at a lower end side of the projection optical system, having an opening through which the illumination light passes, and configured to form an immersion area with liquid between the projection optical system and a portion of the substrate held by the stage at a position opposite to the projection optical system; the grating members are arranged outside of the nozzle unit; and the exposure apparatus is configured to expose the substrate with the illumination light via the projection optical system and a liquid of the liquid immersion area. each of the heads is provided at the stage so as to be arranged outside of the upper surface of the stage, with reference to a direction parallel to the predetermined plane; a nozzle unit is provided at a lower end side of the projection optical system, having an opening through which the illumination light passes, and configured to form an immersion area with liquid between the projection optical system and a portion of the substrate held by the stage at a position opposite to the projection optical system; the grating members are arranged outside of the nozzle unit; and the exposure apparatus is configured to expose the substrate with the illumination light via the projection optical system and a liquid of the liquid immersion area.