We propose a novel 1.3/1.55μm wavelength demultiplexer for integration with lasers and detectors on the InP material system. A chirp grating is placed inside a multimode interference (MMI) structure to shorten the device length and increase wavelength tolerance. The simulation using the bi-directional beam propagation method proves that the demultiplexer can have very low insertion loss and high isolation ratio. The approach of grating fabrication is also described.