This paper discusses the development of a frequency agile receiver for CO₂ laser based differential absorption lidar (DIAL) systems. The receiver is based on the insertion of a low-order tunable etalon into the detector field of view. The incorporation of the etalon into the receiver reduces system noise by decreasing the instantaneous spectral bandwidth of the IR detector to a narrow wavelength range centered on the transmitted CO₂ laser line, thereby improving the overall D* of the detection system. A consideration of overall lidar system performance results in a projected factor of 2 to 7 reduction in detector system noise, depending on the characteristics of the environment being probed. These improvements can play a key role in extending the ability of DIAL to monitor chemical releases from long standoff distances.