We have developed a high-resolution alignment technique which utilizes the partial polarization property of fine period transmission gratings. It is especially useful when the grating period is sufficiently small so that there are no visible diffracted orders. This technique uses a photoelastic modulator (PEM) to produce an intensity signal that is proportional to the sine of twice the angle between the grating lines and the PEM crystal axis. The experimentally demonstrated resolution of this technique on 200-nm period gold transmission gratings is better than 1 sec of arc. This technique was developed to align x-ray transmission gratings for spectroscopy and interferometry applications.