Overlay control is becoming increasingly more important with the scaling of technology. It has become even more critical and more challenging with the move toward multiple-patterning lithography, where overlay translates into CD variability. Design rules and overlay have strong interaction and can have a considerable impact on the design area, yield, and performance. We study this interaction and evaluate the overall design impact of rules, overlay characteristics, and overlay control options. For this purpose, we developed a model for yield loss from overlay that considers overlay residue after correction and the breakdown between field-to-field and within-field overlay; the model is then incorporated into a general design-rule evaluation framework to study the overlay/design interaction. The framework can be employed to optimize design rules and more accurately project overlay-control requirements of the manufacturing process. The framework is used to explore the design impact of litho-etch litho-etch double-patterning rules and poly line-end extension rule defined between poly and active layer for different overlay characteristics (i.e., within-field versus field-to-field overlay) and different overlay models at the 14-nm node. Interesting conclusions can be drawn from our results. For example, one result shows that increasing the minimum mask-overlap length by 1 nm would allow the use of a third-order wafer/sixth-order field-level overlay model instead of a sixth-order wafer/sixth-order field-level model with negligible impact on design.