We demonstrated air-bridged lateral growth of an Al0.98Ga0.02N layer with significant dislocation reduction by introduction of a porous AlN buffer underneath via metalorganic chemical vapor deposition. By modifying growth conditions, a porous AlN layer and an atomically flat AlN layer have been obtained for comparison, confirmed by atomic force microscopy. An Al0.98Ga0.02N layer was subsequently grown on both the porous AlN layer and the atomically flat AlN layer under identical conditions. Significant dislocation reduction was achieved for the Al0.98Ga0.02N layer grown on the porous AlN buffer layer, compared to the layer grown on the atomically flat AlN layer, as observed by transmission electron microscopy. Clear bubbles from the layer grown on the porous AlN buffer layer have been observed, while in contrast, there was not any bubble from the layer on the flat AlN buffer, confirming the mechanism of lateral growth for dislocation reduction. Asymmetric x-ray diffraction studies also indicated that the crystal quality was dramatically improved using the porous AlN buffer layer. (C) 2005 American Institute of Physics.