You need to do the following:
Create a background with rounded corners for the Dialog's background:
<?xml version="1.0" encoding="utf-8"?>
<shape xmlns:android="http://schemas.android.com/apk/res/android"
android:shape="rectangle" >
<solid android:color="#fff" />
<corners
android:bottomLeftRadius="8dp"
android:bottomRightRadius="8dp"
android:topLeftRadius="8dp"
android:topRightRadius="8dp" />
</shape>
Now in your Dialog's XML file in the root layout use that background with required margin:
android:layout_marginLeft="20dip"
android:layout_marginRight="20dip"
android:background="@drawable/dialog_background"
finally in the java part you need to do this:
dialog.requestWindowFeature(Window.FEATURE_NO_TITLE);
dialog.setContentView(layoutResId);
View v = getWindow().getDecorView();
v.setBackgroundResource(android.R.color.transparent);
This works perfectly for me.