We have investigated the optimization of Al0.2Ga0.8N layers directly grown on sapphire by metalorganic vapor phase epitaxy (MOVPE). The quality of the AlGaN epilayers was improved by in situ nano-masking employing ultra-thin SiNx interlayers. Transmission electron microscopy (TEM) investigations reveal an enormous reduction of edge-type dislocations by SiNx nano-masking. Furthermore, formation of bundles of dislocations converging to the surface is visible, leading to large areas up to 1 mu m in size on the surface which are almost defect free. The SINx surface coverage was carefully optimized resulting in narrower (1 0 2)-reflections of high resolution X-ray diffraction (HRXRD), down to full width at half maximum (FWHM) values of 570 arcsec, in addition to narrow symmetric HRXRD reflections down to FWHM of 150 arcsec. Structures with double SiNx interlayer revealed even higher quality of the epilayers with a FWHM of 440 arcsec for the (1 0 2)-reflection. A series of GaN-AlGaN multi-quantum wells were grown on such high quality templates. The MQWs show a significant decrease in peak widths and also an increase in the luminescence intensity. Furthermore, these templates have been used as buffer layers for ultraviolet light-emitting diodes emitting at 350 nm. (C) 2010 Elsevier B.V. All rights reserved.