We report firm evidence for the underlying mechanism of the enhanced luminescence in InxAlyGa1-x-yN quaternary epilayers. Photoluminescence, Raman scattering, field emission scanning electron microscopy (SEM), energy dispersive x-ray spectrometry (EDS), and cathodoluminescence (CL) measurements have been employed to study the correlation between optical and structural properties in these alloys. The phonon replica structures accompanying luminescence line, InGaN-related phonon modes in Raman spectra, SEM images, element composition analysis by EDS, and localized CL spectra provide the evidence to show that the existence of InGaN-like nanoclusters is responsible for the enhanced luminescence in InxAlyGa1-x-yN quaternary alloys. Our result therefore gives an excellent demonstration showing that because of the existence of nanoclusters a very defective alloy can exhibit a strong emission even at room temperature. (C) 2004 American Institute of Physics.