We present an analysis of the 100ks X-ray spectrum of the narrow-line Seyfert 1 Galaxy Ark 564, taken with the Low Energy Transmission Grating Spectrometer (LETGS) on board Chandra. Using chisquare statistics, several continuum models of the time-averaged spectrum of this object are compared, obtaining a semi-empirical solution for the description of the intrinsic emission continuum and a physical solution for the intrinsic absorption of the system. We find that the 0.1-10keV spectrum can be well described by a power law plus two thermal components that account for the soft step. We are also able to detect and measure several narrow, unresolved absorption lines arising from highly ionized species of C, N, O, and Fe. The material seems to have a velocity consistent with the systemic velocity of the galaxy. This piece of evidence, in addition to the very low observed column density of Nh~10^20^cm^-2^, is in good agreement with the scenario of a transverse biconical outflow with a gas density of n10lt-days, but a dust torus origin cannot be ruled out.