High resolution electron microscopy has been applied to characterize the structure of &bgr;-GaN epilayers grown on (001) GaAs substrates by plasma-assisted molecular-beam epitaxy. An rf plasma source was used to promote chemically active nitrogen. An exposure of the layer surface to the As flux during the growth of the first few monolayers was shown to result in remarkably flat GaN–GaAs interface. The best quality GaN layers were achieved by near-stoichiometric nucleation with optimal Ga-to-N ratio. Deviation from these nucleation conditions leads to interface roughening and formation of the wurtzite phase within the GaN layer. All the layers contained a high density of stacking faults near the interface which sharply decreases toward the surface. Stacking faults were anisotropically distributed within the GaN layer probably due to different properties of &agr; compared to &bgr; dislocations in cubic GaN. The majority of stacking faults intersect the interface along lines parallel to the major flat of the GaAs wafer. The stacking faults are often associated with atomic steps at the GaN–GaAs interface. ©1997 American Institute of Physics.