We report the first observation of free exciton transitions (X), as well as donor and acceptor bound exciton transitions (D0X,D+X, andA0X), in the high‐resolution photoluminescence (PL) spectra of high‐quality AlxGa1−xAs layers grown by molecular beam epitaxy (MBE) over the composition range 0.01≤x<0.2. This observation contrasts markedly with several previous investigations of AlxGa1−xAs samples of somewhat higher composition (x>0.2) in which only one or two bound exciton transitions have been reported together with the typically observed carbon free‐to‐bound transitions (e,A0). From a systematic study of MBE growth and PL spectral characterization, we find that both the free and bound exciton transitions of the AlxGa1−xAs layers correlate to their counterparts in high‐purity MBE GaAs layers and that their photon energies increase linearly with increasingxvalue, as expected for these low AlAs mole fraction samples. At compositions as low as 2.1%, and as high as 12.5%, spectral linewidths ofD0Xtransitions were found to be as narrow as 0.3 and 2 meV, respectively, in reasonably good agreement with the recent PL linewidth predictions of Singh and Bajaj which are based on a theory of alloy scattering. These observations confirm the high quality of the lowx‐value AlxGa1−xAs samples which were grown to thicknesses between 1 and 2 &mgr;m at substrate temperatures approaching 700 °C in a MBE system having low background impurity contamination.