Measurements of low-frequency transconductance dispersion at different temperatures and conductance deep level transient spectroscopic (CDLTS) studies of an AlGaAs/InGaAs pseudomorphic high electron mobility transistor (p-HEMT) were carried out. The experimental results show the presence of defect states at the AlGaAs/InGaAs hetero-interface. A mobility degradation model was developed to explain the low-frequency negative transconductance dispersion as well as the apparent ‘hole’ like peaks observed in the CDLTS spectra. This model incorporates a time-dependent change in the two-dimensional electron gas mobility due to ionized impurity scattering by the remaining charge states at the adjoining AlGaAs/InGaAs hetero-interface.