We propose a physical model which describes the post‐deposition coarsening of coherently strained three‐dimensional islands on a flat substrate. In this model, formulated in terms of a set equations of motion for the island volume and position, both Ostwald ripening mechanism and misfit strain induced elastic effects are taken into account. Large scale computer simulations demonstrate that the repulsive inter‐island elastic interaction causes the island motion, leading to the self‐organized formation of a regular array of islands with both uniform size and spacing. © 2004 American Institute of Physics