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The microstructural evolution and the effect on in-plane magnetic properties of epitaxial Fe/MgO layers grown on InAs(001) substrates have been investigated as a function of MgO growth temperature. The Fe grows three-dimensional islands with two different in-plane textures along [010] and [110] directions on the MgO layers grown below 200 °C in remarkable contrast to two-dimensional Fe layers on the MgO layers grown above 300 °C. As the MgO growth temperature increases, both tensile-strained MgO and the subsequent Fe are simultaneously relaxed, and the distribution of 45°-rotated Fe lattices with [010] texture becomes dominant. The experimental results imply that the microstructural evolution of the Fe is strongly influenced by the underlying misfit strain within the MgO layers grown at different temperatures. The two different epitaxial relationships of the Fe islands lead to no magnetic anisotropy, while the Fe layer with the single epitaxial relationship of Fe[010]//MgO[110]//InAs[110] shows cubic m...