The residual stress in InP layers grown by microchannel epitaxy (MCE) on Si substrates was calculated using the three-dimensional finite element method (FEM). In the calculation, stress is assumed to be produced by the difference in thermal expansion between InP and Si during the cooling stage after the growth. No formation or movement of dislocations, by which the stress is released, is assumed. The calculation shows that the island structures of MCE layers are useful to reduce thermally induced stress. For example, stress in an MCE layer can be reduced to one-hundredth of that of a conventional uniform epitaxial layer. The calculation also shows that the stress at the MCE surface decreases rapidly with increasing the layer thickness. On the other hand, the change in stress is very small with varying the line-seed width or the thickness of the SiO2 mask. It is shown that the residual stress is further decreased when the MCE layer slips freely on the SiO2 mask.