We have found that GaN epilayers grown by NH3-source molecular beam epitaxy (MBE) contain hydrogen. Dependent on the hydrogen concentration, GaN on (0001) sapphire can be either under biaxially compressive strain or under biaxially tensile strain. Furthermore, we notice that background electrons in GaN increase with hydrogen incorporation. X-ray photoelectron spectroscopy (XPS) measurements of the N1s region indicate that hydrogen is bound to nitrogen. So, the microdefect Ga...H-N is an effective nitrogen vacancy in GaN, and it may be a donor partly answering for the background electrons. (C) 1999 Elsevier Science B.V. All rights reserved.