The temperature dependence of the formation of nano-scale indium clusters in InAlGaN quaternary alloys, which are grown by metalorganic chemical vapour deposition on GaN/Si(111) epilayers, is investigated. Firm evidence is provided to support the existence of phase separation, or nano-scale In-rich clusters, by the combined results of high-resolution transmission electron microscopy (HRTEM), high-resolution x-ray diffraction (HRXRD) and micro-Raman spectra. The results of HRXRD and Raman spectra indicate that the degree of phase separation is strong and the number of In clusters in the InAlGaN layers on silicon substrate is higher at lower growth temperatures than that at higher growth temperatures, which limits the In and Al incorporated into the InAlGaN quaternary alloys. The detailed mechanism of luminescence in this system is studied by low temperature photoluminescence (LT-PL). We conclude that the ultraviolet (UV) emission observed in the quaternary InAlGaN alloys arises from the matrix of a random alloy, and the second emission peak in the blue-green region results from the nano-scale indium clusters.