We have prepared small InP islands which are embedded in In0.485Ga0.515P grown on a (100) GaAs substrate by solid‐source molecular beam epitaxy. The InP islands form due to the 3.7% lattice mismatch between In0.485Ga0.515P and InP. Atomic force microscopy measurements show that the island size is typically ∼50 nm in diameter and ∼5 nm in height for nominally two monolayers of InP deposited on In0.485Ga0.515P. The energy of the photoluminescence (PL) peak shifts from 1.85 to 1.53 eV as the nominal InP thickness increases from 2 to 10 monolayers. A minimum PL linewidth of 21.6 meV and the maximum intensity of the PL originating from the InP islands is observed for 7.3 monolayers InP. ©1995 American Institute of Physics.