To clarify the mechanisms governing the formation and reduction of threading dislocations (TDs) in aluminum nitride (AlN) layers grown on SiC (0 0 0 1) substrates by metalorganic vapor phase epitaxy (MOVPE), we characterized the mosaicity and the growth mode. High-density (similar to 10(11) cm(-2)) three-dimensional (3D) AlN islands nucleate on the substrate. Because the islands are slightly misoriented with respect to each other, dislocations are generated with a high density of 10(10)-10(11) cm(-2) as the islands coalesce. However, most of the dislocations are annihilated because their propagation direction changes horizontally during the island growth. Thus, at the initial growth stage, the dislocation density is drastically decreased to 10(8)-10(9) cm(-2). Consequently, as the layer thickness increases, the defect-free region becomes larger and the misorientation becomes smaller. On the other hand, we found that the TDs induce a large tensile strain and that the residual strain decreases with decreasing dislocation density. From the relationship between a- and c-lattice strains, the Poisson ratio of AlN was determined to be 0.19. (c) 2006 Elsevier B.V. All rights reserved.