We have observed spontaneous, lateral composition modulation in tensile InAlAs alloy films grown as short-period superlattices on InP (001). We have analyzed these films using transmission electron microscopy, x-ray reciprocal space mapping, and polarized photoluminescence spectroscopy. We find the growth front is nonplanar, exhibiting ∼2nm deep cusps aligned with the In-rich regions of the compositionally modulated films. In addition to the measured 15nm wavelength modulation in the [110] direction, a modulation of 30nm wavelength is seen in the orthogonal [110] direction. The photoluminescence from the modulated layer is strongly polarized and red shifted by 0.22eV.