Inverse lithography technology (ILT) treats photomask design for microlithography as an inverse mathematical problem. We show how the inverse lithography problem can be addressed as an obstacle reconstruction problem or an extended nonlinear image restoration problem, and then solved by a level set time-dependent model with finite difference schemes. We present explicit detailed formulation of the problem together with the first-order temporal and second-order spatial accurate discretization scheme. Experimental results show the superiority of the proposed level set-based ILT over the mainstream gradient methods.