A new method for studying the early stages of the growth of oxide epilayers by transmission electron microscopy (TEM) is described. The technique uses well‐characterized, single‐crystal TEM foils as substrates for the deposition process. In the present study, chemical vapor deposition was used to form small islands (50–300 nm) of &agr;‐Fe2O3on (0001) oriented Al2O3thin‐foil substrates. The preferential nucleation of islands at surface steps on the alumina is clearly demonstrated. Selected area diffraction and moire´ fringe pattern analysis are used to show the epitactic nature of the growth and to study the island morphology.