The instability during the growth and processing of epitaxial GeSn layers with high Sn molar fraction and high compressive strain is still to be fully studied. In this work, the relationship among strain relief, dislocations, and Sn outdiffusion in GeSn layers with a Sn content of ∼9 atom % was studied as a function of pre-existing misfit/threading dislocation (MD/TD) density and annealing time at 300 °C. For a GeSn epilayer strained to a Ge-on-Si virtual substrate (Ge-VS), an increase of strain relief by a factor of ∼2 is observed after 2 h of annealing, without a significant effect on strain relaxation for a more prolonged temperature treatment. This is explained by the limited propagation or elongation of pre-existing MDs at the interface of GeSn/Ge-VS. The onset of Sn outdiffusion and the appearance of segregation spots are observed for the GeSn epilayers with significant strain relaxation (≥50%) before annealing, for which the density of MDs ≥ 2 × 10 5 cm −1 . This is explained by generation of high-density MDs/TDs acting as preferential sites for Sn accumulation during the growth of the GeSn layer. This work explicitly provides an understanding that dislocation engineering is one of the key factors for the stability and performance of GeSn semiconductors.