We prepared InGaN layers on GaN/sapphire substrates using rf-MBE. Photoluminescence (PL) from these layers, grown at different temperatures Ts, shows that there is a strong tendency of GaN to form a separate phase as Ts is increased from 600 degreesC to 650 degreesC. Concomitant with the phase separation, the PL from the InGaN phase broadens, which indicates that indium composition in this phase becomes increasingly non-uniform. Indium compositions measured by Rutherford backscattering (RBS) are consistent with these results. We also observed an increase in PL intensity for InGaN layers grown at higher temperatures. In this paper, we also report on preparing a top-contact InGaN/GaN light emitting diode. The device was operated at 447 run and had the emission line width of 37 nm with no observable impurity related features. The turn-on voltage was 3.0 V. The output power was 20 muW at 60 mA drive current.