Dislocations and traps in MBE grown p-InGaAs/GaAs lattice-mismatched heterostructures are investigated by Cross-section Transmission Electron Microscopy (XTEM), Deep Level Transient Spectroscopy (DLTS) and Photo-luminescence (PL). The misfit dislocations and the threading dislocations observed by XTEM in different samples with different In mole fractions and different InGaAs layer thickness generally satisfy the Dodson-Tsao's plastic flow critical layer thickness curve. The XTEM, DLTS and PL results are consistent with each other. The threading dislocations in bulk layers introduce three hole trap levels H1, H2 and H5 with DLTS activation energies of 0.32 eV, 0.40 eV, 0.88 eV, respectively, and one electron trap E1 with DLTS activation energy of 0.54 eV. The misfit dislocations in relaxed InGaAs/GaAs interface induce a hole trap level H4 with DLTS activation energy between the range of 0.67-0.73 eV. All dislocation induced traps are non-radiative recombination centers which greatly degrade the optical property of the InGaAs/GaAs layers.