A TEM study of the initial nucleation layers for the two-step growth of CdTe on 2°-off (001) GaAs substrates by MOCVD is presented. When the substrates are degreased and etched in the usual manner, the initial deposits are oriented with their axes parallel to those of the substrates. When the substrates are, instead, prepared by thermal etching at 545-585°C, the initial deposits contain both (001) and (111)-oriented grains. When these polycrystalline initial deposits are heated to the “bulk” growth temperature, epitaxial regrowth occurs giving a single crystal film with a very distinctive anisotropic defect microstructure. Possible reasons for these effects are discussed.