We report an in situ etching treatment of self-assembled InAs islands using in a molecular beam epitaxy system which allows reshaping and downsizing of the quantum dots with atomic layer precision. etching of a thin GaAs layer covering the InAs islands results in an array of 10 - 15 nm size holes on the surface due to enhanced etching at locally strained areas. The dots of a second InAs layer nucleate preferentially within the etched dips, which are vertically aligned with the underlying InAs dots. The photoluminescence linewidth is improved as compared to non-etched samples with equal spacer thickness.