Abstract: A method of recovering gold and palladium from a spent aqueous potassium iodide-iodine etching solution, and regenerating the etching solution for reuse, involves adjusting the spent solution to a strongly basic pH (e.g., 12.5) by the addition of an alkaline compound (e.g., potassium hydroxide) to precipitate metallic gold from the solution. Metallic palladium is precipitated from the resulting alkaline solution by the addition of a borohydride, (e.g., potassium borohydride). Following removal of the precipitated gold and palladium, the spent alkaline solution is made acidic-to-neutral in pH to change potassium hypoiodite and some potassium iodide in the solution to iodine. The solution then is adjusted back upward to a slightly alkaline pH value (e.g., 9.0), and precipitate is removed at room temperature. Potassium iodide and iodine crystals then are added to the solution, as necessary, to regenerate the solution to substantially its original composition and strength for reuse.