Local droplet etching (LDE) drills self-assembled nanoholes into AlGaAs surfaces and represents a powerful technique for the fabrication of versatile quantum structures like quantum dots, rings, and molecules. Usually, LDE is performed at temperatures T=600−680∘C if Al is used as the etching material. Now, atomic force microscopy establishes that Al-LDE drills nanoholes also at very low temperatures down to T=360∘C which is 300∘C below the melting point of bulk Al. Several possible etching mechanisms like a melting-point depression, solid-state etching, and alloying are discussed. Selective wet-chemical etching experiments using HF indicate significant alloying with Ga from the substrate, and thus the formation of Al-Ga droplets for etching. The upper limit of x≤50% for the Al content inside the Al-Ga droplets is indicated by the selectivity of the HF acid. This value is in agreement with an estimation of x = 0.42, which is based on the measured droplet and hole volumes. A comparison with the Al-Ga phase diagram indicates that a completely liquid phase of the droplets is essential for etching.