The misfit strain relaxation and the coalescence stages of three-dimensional islands during the heteroepitaxy of Si1 -xGex on Si(001) have been investigated using an ultra-high vacuum transmission electron microscope combined with a conventional molecular beam epitaxy chamber. Moire-fringes appear at depositions of 10, 25 and 100 ML for Ge compositions x = 1, 0.7 and 0.3, respectively. This increase in the deposition roughly corresponds to the increase in critical thickness for Si1 - xGex layers. The relaxation of misfit strain in Si1 - xGex islands proceeds when the island height exceeds the critical thickness but the strain relaxation has not finished, with depositions up to 200 ML. For x = 1, 86% of total misfit strain is relaxed, with deposition up to 100 ML, by the generation of misfit dislocations (70%) and stacking faults (16%). Furthermore, the generation of a threading dislocation at the interface of coalesced islands is observed.