A new method for simulation of etching and deposition processes has been developed. This method is based on fundamental morphological operations derived from image and signal processing. As the material surface during simulation moves in time, the geometry either increases or decreases. If the simulation geometry is considered as a two-valued image (material or vacuum), etching and deposition processes can be simulated by means of the erosion and dilation operation. Together with a cellular material representation this method allows an accurate and stable simulation of three-dimensional arbitrary structures. Simulation results for several etching and deposition problems demonstrate accuracy and generality of our method.