The effect of diffusions and heat treatments on faulted epitaxial materials has been investigated using thinned‐film electron microscopy. Samples of epitaxial silicon were grown with a deliberately high concentration of stacking faults for these studies. Heat treatment were performed in N2and He ambient at 1000°, 1100°, 1200°, and 1300°C. Diffusion consisted of a 1050°C heat treatment for 30 min in P2O5(platinum box technique) to give a high concentration layer (> 1020/cm3). Heat treatments alone had a minor effect on the faulted material. The diffusion process, on the other hand, caused major alteration in the nature and density of faults. Stacking faults were altered to the extent that the orderly striped contrast disappeared and was replaced by individual or piled‐up groups of dislocations. Large clusters of precipitate were observed inside stacking fault regions and on helical dislocations. Dislocation climb was detected as indicated by a large number of helical dislocations.The presence of a ``necklace of precipitate'' associated with stacking faults and dislocations illustrates the role played by these faults as nucleation sites. Such precipitation occurring in an active device region might well be sufficient to drastically alter or destroy the device.