All-reflective interferometry based on nano-structured diffraction gratings offers new possibilities for gravitational wave detection. We investigate an all-reflective Fabry-Perot interferometer concept in 2nd order Littrow mount. The input-output relations for such a resonator are derived treating the grating coupler by means of a scattering matrix formalism. A low loss dielectric reflection grating has been designed and manufactured to test the properties of such a grating cavity.