Light induced transient grating technique is applied to study the recombination and transport properties of the excess carriers in the iron‐doped highly resistive GaN/sapphire epilayers, grown by MOCVD and doped using the modulation doping technique. Carrier lifetime, ambipolar diffusion coefficient, and threshold of the stimulated recombination are compared between Fe‐doped (NFe <1019 cm–3 and (0.5‐1)×1020 cm–3) and intentionally undoped epilayers. For comparison, undoped μ‐ELO GaN is also included into the study. In the Fe‐doped layers, we observe an increase in carrier lifetime, an increase in hole mobility, and a decrease in stimulated recombination efficiency. The lower‐doped layer exhibits the properties comparable to those of the high quality μ‐ELO GaN: carrier lifetime of 1.5 ns and diffusion coefficient of 1.9 cm2/s at 295 K; it is remarkable that the diffusion coefficient in the doped samples remains higher within the whole 30‐300 K temperature range. The enhanced mobility and lifetime in the iron‐doped samples we attribute to the inhibited electrical activity of the dislocations. (© 2009 WILEY‐VCH Verlag GmbH & Co. KGaA, Weinheim)