Recent studies on strained layer heteroepitaxy in high misfit systems (eg. Ge on Si) have clearly indicated the importance of elastic strain on a number of surface-mediated growth effects. In this work we consider the transition from ideal, 2-D layer-by-layer growth to the initial stages of a 3-D growth morphology as a precursor to misfit dislocation injection in GexSi1−x/Si heterostructures with x as low as 0.15. Experimentally, we have studied a wide range of MBE-and CVD-grown single and multilayer GexSi1−x/Si (x<0.5) structures using transmission electron microscopy and photoluminescence spectroscopy. Firstly, we describe a new mechanism for the heterogeneous nucleation of misfit dislocations in strained epitaxial layers, the ‘double half-loop’ source, which originates from atomic-scale (<1.5 nm) interfacial perturbations. Secondly, the atomic-scale dilatational perturbations, which can exist in areal densities up to ∼109 cm−2, have been identified as the origin of intense, broad-band PL from MBE-grown GexSi1−x/Si strained layers. The change in PL behaviour with increasing strained layer thickness has been used to study the effects of elastic strain-induced surface roughening at low misfits.