Layers of AlxGa1-xN, with 0 less than or equal to x less than or equal to 1, were grown on Si(111) substrates by gas source molecular beam epitaxy with ammonia. We show that the initial formation of the Si-N-Al interlayer between the Si substrate and the AIN layer, at a growth temperature of 1130-1190 K, results in very rapid transition to two-dimensional growth mode of AIN. The transition is essential for subsequent growth of high quality GaN, AlxGa1-xN, and AlGaN/GaN superlattices. The undoped GaN layers have a background electron concentration of (2-3) x 10(16) cm(-3) and mobility up to (800 +/- 100) cm(2)/V s, for film thickness similar to 2 mum. The lowest electron concentration in AlxGa1-xN,with 0.2 < x < 0.6, similar to (2-3) x 10(16) cm(-3) for 0.5-0.7-mum-thick film. Cathodoluminescence and optical reflectance spectroscopy were used to study optical properties of these AlxGa1-xN layers. We found that the band gap dependence on composition can be described as E-g(x) = 3.42 + 1.21x + 1.5x(2). p-n junctions have been formed on crack-free layers of GaN with the use of Mg dopant. Light emitting diodes with peak emission wavelength at 3.23 eV have been demonstrated.