Abstract Epitaxial lateral overgrowth of 1.5 µm wide AlN ridges with 1.5 µm spacing with AlGaN or AlN was investigated by electron microscopy and cathodoluminescence. Overgrowth of [1 1 00] oriented stripes leads to relatively smooth c‐plane AlGaN surfaces while on [11 2 0] oriented stripes strongly facetted surfaces evolve. The growth on the different facets leads to strong compositional fluctuations. These fluctuations can be prevented by the growth of binary AlN over the ridges instead of AlGaN. Only the [1 1 00] oriented ridges formed smooth surfaces, suitable for subsequent deposition of AlGaN with homogeneous composition. The lateral epitaxial overgrowth leads to a remarkable reduction in threading dislocation density as shown by TEM and X‐ray diffraction. The critical thickness of AlN before cracking was significantly increased in comparison to unpatterned growth. The resulting AlN template is a promising ultraviolet transparent template for LED. (© 2011 WILEY‐VCH Verlag GmbH & Co. KGaA, Weinheim)