Thermal evaporation is a simple and rapid method to fabricate semiconducting BaSi2 films. In this study, to elucidate the BaSi2 formation mechanism, the microstructure of a BaSi2 epitaxial film fabricated by thermal evaporation has been investigated by transmission electron microscopy. The BaSi2 film is found to consist of three layers with different microstructural characteristics, which is well explained by assuming two stages of film deposition. In the first stage, BaSi2 forms through the diffusion of Ba atoms from the deposited Ba-rich film to the Si substrate while in the second stage, the mutual diffusion of Ba and Si atoms in the film leads to BaSi2 formation. On the basis of the BaSi2 formation mechanism, two issues are addressed. One is the as-yet unclarified reason for epitaxial growth. It is found important to quickly form BaSi2 in the first stage for the epitaxial growth of upper layers. The other issue is the high oxygen concentration in BaSi2 films around the BaSi2–Si interface. Two routes of oxygen incorporation, i.e., oxidation of the Si substrate surface and initially deposited Ba-rich layer by the residual gas, are identified. On the basis of this knowledge, oxygen concentration is decreased by reducing the holding time of the substrate at high temperatures and by premelting of the source. In addition, X-ray diffraction results show that the decrease in oxygen concentration can lead to an increased proportion of a-axis-oriented grains.