In order to improve the signal-to-noise ratio for laser applications underwater, a grating resonator with an intra-cavity etalon was designed to compress the spectrum of XeF blue-green laser. First, a grating resonator was used to obtain a sub-nanometer laser linewidth, and then, a further spectral compression was performed by inserting an etalon into the grating resonator. The experimental results show that a linewidth of 0.14 nm can be obtained by using a 1 200 line/mm grating, and the linewidth can be further compressed to 39 pm by inserting an etalon, with a reflectivity of 50%, in the grating resonator. The final laser pulse energy is about 65 mJ and the pulse duration is 1 μs. Although the gain coefficient of the XeF (C-A) laser is low, the optical loss of the resonator can be reasonably controlled by optimizing the working parameters of the grating and the etalon, thereby a 10pm-level laser linewidth can be realized.