GaAs-AlAs heterostructures have been grown on a GaAs substrate in a low pressure MOCVD reactor. After the C doped AlAs layer was deposited on a GaAs substrate, the undoped GaAs cap layer was grown with a thickness of 150 Å. The sample was exposed to hot water vapor mixed with N2 in a sealed furnace at 400 °C for 15 min. After the thermal oxidation, the sample was characterized by DCXRD, SIMS, AES, XPS, and TEM. The analyses indicate that the aluminum oxide layer is formed from C doped AlAs layer with stable microcrystalline Al2O3, and that the upper part of GaAs cap layer exposed to water vapor is modified to gallium oxide and arsenic oxide, while the lower part of the GaAs layer is unchanged. The results clearly suggest that the GaAs layer can play a role as a diffusion path for exchanging the arsenic and oxygen. Since the oxidation of AlAs is far more reactive than that of GaAs, the oxygen bonded to GaAs in a thin cap layer can be easily reduced to the under-layer of AlAs without a severe modification of GaAs lattice structure.