A novel scheme is proposed, in which the aberrations in the off-axis holographic lenses used as demultiplexers are reduced to a low enough level for relatively small channel spacing. The scheme includes optimizing the recording and reconstruction geometries and collimating the reconstruction wave with a gradient-index lens. A demultiplexer operated in the 1 550-nm band with 5-nm channel spacing and ?\infty-dB crosstalk is obtained using the scheme. The channel spacing can be decreased to 2 nm by etching the cladding of the output fibers to a smaller size.