We have examined the growth and device characteristics of In0.53+xGa0.47−xAs/ In0.52Al0.48As (0≤x≤0.27) pseudomorphic modulation‐doped field‐effect transistors on InP substrates.Insitureflection high energy electron diffraction oscillation studies were carried out to study the growth of pseudomorphic InGaAs on GaAs and InP substrates. The data from these measurements and a theoretical formalism based on energy minimization suggest that in the pseudomorphic growth regime increased strain causes growth modes to change from two‐dimensional layer‐by‐layer to a three‐dimensional island mode. The resulting interface roughness is used as a parameter to explain the observed trends in channel mobility and device performance. It is also shown that altered growth techniques, such as migration enhanced epitaxy, in which the surface reconstruction may be changed, can restore the layer‐by‐layer growth mode for large amounts of strain in the pseudomorphic layer.