The effects of nitrogen incorporation into the In0.4Ga0.6As1-xNx/GaAs single quantum wells (SQWs), where x = 0.5 and 2%, grown on GaAs substrates by metalorganic chemical vapor deposition (MOCVD) were investigated using photoluminescence (PL) and high-resolution transmission electron microscopy (HRTEM). The evolution of the excitation-dependent PL and PL-peak position with temperature between 10 and 300 K shows that quantum-dot-like states occurred at that high nitrogen incorporation (x = 2%) and were confirmed by an HRTEM image which showed small dark regions about 2–3 nm in size was found in the interface of In0.4Ga0.6As0.98N0.02 and GaAs. Our investigations indicate that high nitrogen incorporation into the In0.4Ga0.6As1-xNx/GaAs system influenced carrier localization and might cause the formation of the dot-like states.