Here we report on the study of nano-crack formation in Al1-x,InxN/AlN/GaN heterostructures, on its association with composition fluctuation and on its local electrical properties. It is shown here that indium segregation at nano-cracks and threading dislocations originating from the non-pseudomorphic MN interlayer could be the cause of the high reverse-bias gate leakage current of Ni/Au Schottky contacts on Al1-xInxN/AlN/GaN heterostructures and significantly affects the contact rectifying behavior. Segregation of indium around crack tips in Al1-x,InxN acting as conductive paths was assessed with conductive atomic force microscopy. (C) 2011 Acta Materialia Inc. Published by Elsevier Ltd. All rights reserved.