A flat-topped etched diffraction grating (EDG) demultiplexer with a low polarization-dependent loss (PDL) is designed. A design and simulation method based on the method of moment (MoM) is proposed. A 65-channel EDG demultiplexer with channel spacing of 100 GHz is considered as a design example. A tapered multi-mode interferometer (MMI) is used to flatten the passband of the EDG demultiplexer. The numerical results show that the exit width of the tapered waveguide impacts the loss of the TE case more than that of the TM case. Based on this fact, the exit width of the taper is optimized to obtain the lowest PDL. The tapering angle is also optimized where the minimal ripple is obtained. The designed EDG demultiplexer has an excellent flat-topped spectral response and a very low PDL.