MgO tunneling barriers are extensively studied as a spin filtering and diffusion barrier for deposition of ferromagnetic layers on GaAs (001) surfaces. The relatively large lattice mismatch of the MgO and GaAs substrate and probable formation of interface states at the metal layer side require a careful barrier design. We present a study of deposition, microstructure, and strain relaxation in MgO barriers deposited on GaAs. The dependence of morphology of MgO layers on their thickness was characterized using a combination of X-Ray Reflectivity and High Resolution Transmission Electron Microscopy. The stress at the MgO/GaAs interface was observed to be released through the formation of misfit dislocations and partially by the formation of mis-oriented domains. The deposited MgO and Fe layers were found to be highly textured irrespective of the thickness of MgO layers. Energy dispersive X-ray microanalysis was used to observe intermixing at the interface of Fe and MgO layers. I. INTRODUC