Continuum elastic theory is applied to the formation of misfit dislocations and point defects in strained layer structures. Explicit calculations of the energies of misfit dislocations in the double‐ and single‐kink geometries yield line tensions below which strained films are stable with respect to defect formation. Our results yield a mismatch‐dependent stability limit which, in the double kink case, differs from the Matthews–Blakeslee model by a geometrical factor and by the addition of a stress term associated with climb of the misfit dislocation. While our calculations yield equilibrium stability limits which may not correspond to observed critical thicknesses, the calculated stresses may be applied to descriptions of the kinetics of strain relief in films grown beyond these limits. Last, calculations of strain‐related contributions to the free energy of formation of point defects suggest a contribution ‖ΔGstrain‖ ≂0.25 eV for a 5% lattice mismatch. This suggests a means of suppressing or enhancing the formation of vacancies or interstitials in semiconductors favoring these defects.