Nanoholes, drilled in the (001) surface of AlGaAs by local Al droplet etching, are shown to consist of faceted inner walls. The most prominent facets of the inverted pyramidlike nano-sized etch pits are the {111}A and {1¯11}B surfaces, which differ in their atomic surface terminations. In the [110] direction, the {111} facets change to {112} and/or {113}, which are both stepped surfaces with (111)A terraces. Etching-temperature-dependent data indicate that this facet transition seems kinetically hindered up to etch temperatures above 660 °C, at which point the walls along [1¯10] have already evolved completely towards {1¯11}B facets. The redeposited ring material outside the nanohole develops facets with indices of (115) and higher, thereby forming relatively flat structures. The facets and their indices are unraveled by a combination of atomic force microscopy, scanning electron microscopy, and x-ray diffraction, which is performed on an ensemble as well as on a single hole using nanodiffraction. These results imply that this nanoconfined etching process can be largely understood in a vapor-liquid-solid scheme, which includes the bulk thermodynamics in the Al-Ga-As system, the surface energies of low index facets, and their etch rates and surface terminations.