The effects of rapid thermal annealing on the materials properties of the carbon‐doped AlxGa1−xAs system have been systematically studied. The hole concentration in GaAs and AlGaAs layers doped up to 1021cm−3drop severely after annealing for 5 min at temperatures above 650 °C. The decrease in hole concentration produces a minimum of 8×1019–1020cm−3free carriers. The hole concentration for heavily doped AlAs is relatively stable up to 950 °C in material withp∼1020cm−3. Unlike GaAs, AlAs with a low hole concentration but a substantially higher total carbon background, exhibits a substantial drop in activation for annealing temperatures above 650 °C. High resolution x‐ray diffraction studies show that the lattice parameter of both the AlAs and GaAs becomes less strained relative to the GaAs substrate as the annealing temperature is increased. In both materials, the changes observed with annealing are believed to be due to pairing of the carbon atoms on the As sublattice, resulting in a decrease in the electrically active carbon and the strain in the layer. ©1995 American Institute of Physics.