Microlenses are fabricated with a refractive-index gradient. The refractive-index gradient is produced in a microlens material such that the refractive index is relatively higher in the material nearest the substrate, and becomes progressively lower as the layer gets thicker. After formation of the layer with the refractive-index gradient, material is etched from the layer through a resist to form microlenses. The index of refraction can be adjusted in the microlens material by controlling oxygen and nitrogen content of the microlens materials during deposition. High-oxide material has a lower index of refraction. High-oxide material also exhibits a faster etch-rate. The etching forms the material into a lens shape. After removal of the resist, the microlenses have a lower relative refractive index at their apex, where the index of refraction preferably approaches that of the ambient surroundings. Consequently, light loss by reflection at the ambient/microlens interface is reduced.