The strain-relaxation phenomena and the formation of a dislocation network in 2H-InN epilayers during molecular beam epitaxy are reported. Plastic and elastic strain relaxations were studied by reflection high-energy electron diffraction, transmission electron microscopy, and high resolution x-ray diffraction. Characterization of the surface properties has been performed using atomic force microscopy and photoelectron spectroscopy. In the framework of the growth model the following stages of the strain relief have been proposed: plastic relaxation of strain by the introduction of geometric misfit dislocations, elastic strain relief during island growth, formation of threading dislocations induced by the coalescence of the islands, and relaxation of elastic strain by the introduction of secondary misfit dislocations. The model emphasizes the determining role of the coalescence process in the formation of a dislocation network in heteroepitaxially grown 2H-InN. Edge-type threading dislocations and dislocations of mixed character have been found to be dominating defects in the wurtzite InN layers. It has been shown that the threading dislocation density decreases exponentially during the film growth due to recombination and, hence, annihilation of dislocations, reaching ∼109cm−2 for ∼2200nm thick InN films.