Electrochemical oxidation and etching of highly oriented pyrolytic graphite (HOPG) has been achieved using biased atomic force microscopy (AFM) lithography, allowing patterns of varying complexity to be written into the top layers of HOPG. The graphitic oxidation process and the trench geometry after writing were monitored using intermittent contact mode AFM. Electrostatic force microscopy reveals that the isolated mesoscopic islands formed during the AFM lithography process become positively charged, suggesting that they are laterally isolated from the surrounding HOPG substrate. The electrical transport studies of these laterally isolated finite-layer graphitic islands enable detailed characterization of electrical conduction along the c-direction and reveal an unexpected stability of the charged state. Utilizing conducting-atomic force microscopy, the measured I(V) characteristics revealed significant non-linearities. Micro-Raman studies confirm the presence of oxy functional groups formed during the lithography process. © 2011 IOP Publishing Ltd.