Novel material structures that combine magneto-optic (MO) and semiconductor devices have potential applications in monolithic microwave systems and optoelectronics. We have investigated the materials issues pertaining to the film structure, interface uniformity, and magnetic/MO properties of (BiDy)3(FeGa)5O12 (Bi-DyIG) thin films sputter deposited on Si and GaAs. The rapid thermally annealed films were polycrystalline with a nominal grain size of 20 nm. The magnetic and MO properties were strongly dependent on the type of substrate such that square hysteresis loops and coercivities of 0.1 to 0.9 kOe were observed for Bi-DyIG/Si structures while Bi-DyIG/GaAs structures showed much lower coercivity values (0.03 kOe). A comparison of the magnetic properties, microstructure and substrate composition was carried out with plan-view and cross-section transmission electron microscopy, as well as electron and x-ray diffraction. The results suggest that grain orientation effects, stress, and compositional inhomogeneity due to interfacial reactions or diffusion introduced by the substrate strongly influence the magnetic and MO properties of the films.