Strained layer semiconductor structures provide possibilites for novel electronic devices. When a semiconductor layer is deposited epitaxially onto a single crystal substrate with the same structure but a slightly different lattice parameter, the semiconductor layer grows pseudomorphically with a misfit strain that can be accomodated elastically below a critical thickness. When the critical thickness is exceeded, the elastic strain energy builds up to a point where it becomes energetically favorable to form misfit dislocations. In the absence of a capping layer, surface roughening may also take place which causes strain relaxation in the form of 2D ridges or islands via surface diffusion. At sharp valley regions on the surface, amplified local stresses can cause further defect nucleation and propagation. These defects can be detrimental to the electrical performance of devices by acting as electron-hole recombination centers or current leakage channels. In this paper, we present observations and analyses of two novel defects nucleated in heteroepitaxial Si1−xGex thin films through surface roughening. Heteroepitaxial films 500 Å thick and containing 22% Ge are deposited by LPCVD. These initially flat films are subjected to various annealing conditions in a H2 atmosphere to induce morphological evolution and defect formation. High resolution transmission electron microscopy and atomic force microscopy have been used to study the morphology of defects at the film surface and at the film/substrate interface.