We communicate a detailed study of the epitaxial growth of CeO2on MgO. The key feature of the growth is the dependence of the in‐plane orientation of the CeO2epitaxial layer on the MgO surface morphology. Atomic force microscopic (AFM) measurements, x‐ray analyses, as well as high‐resolution transmission electron microscopy (HRTEM) investigations reveal that on rough substrates a cube‐on‐cube growth of CeO2on MgO occurs while on smooth substrates the CeO2unit cell is rotated around the surface normal by 45° with respect to the MgO unit cell when the deposition rate is low (∼0.3 A˚/s) during the first stages of growth. This growth mechanism can be used for a defined fabrication of 45° grain boundaries in the CeO2layer by controlling the surface roughness of the MgO substrate. This report demonstrates that these 45° grain boundaries may be used to fabricate YBa2Cu3O7−xJosephson junctions. ©1995 American Institute of Physics.