A finite difference beam propagation method (FD-BPM) is analyzed and assessed for the application to two-dimensional structures.The general formulations for the FD-BPM are derived form Maxwell equations for TE mode and TM mode respectively,with the transparent boundary condition (TBC).The FD-BPM is assessed by computing the loss caused by the numerical error and the percentage error of the propagation constants of the TE and TM modes of a step-index slab waveguide.Based on this assessment,FD-BPM appears to be a good tool for the analysis and simulation of the optical waveguide devices and a exellent method for the computer-aided-design in Integrated Optoelectronics.