FIFI LS is a Field-Imaging Line Spectrometer designed for the SOFIA airborne observatory. The instrument will operate in the far infrared wavelength range between 42 to 210 microns. Two spectrometer bands from 42 - 110 microns ('blue' channel) and 110 - 210 microns ('red' channel) allow simultaneous and independent diffraction limited 3D imaging over a field of view of 6 × 6 and 12 × 12 arcseconds respectively. Both spectrometer channels use Littrow mounted diffraction gratings, a set of anamorphic collimators, and a reflective integral field unit. Two large scale 25 × 16 pixel Ge:Ga detector arrays are utilized, axially stressed in the red channel and only slightly stressed in the blue channel. The spectral resolution of the instrument varies between R = 1400 to 6500 depending on wavelength. The sensitivity of the instrument will allow background limited performance over the entire wavelength range. We present test results for the components in the optical path of FIFI LS including grating efficiencies, filter characteristics, detector performance, and optical throughput. Based on our measurements we characterized and optimized the overall system performance to maximize observing efficiency - one of the major instrument design criteria.