We have demonstrated step‐flow growth mode of InN, with monolayer height terrace steps (0.281 nm), using a production‐style PA‐MBE system, GEN200®. The surface morphology exhibits the step‐flow features on relatively large areas and the RMS roughness over an area of 5 × 5 μm2 is 1.4 nm. We also investigated the consequences of In droplets formation during the growth and we have found that the vapor‐liquid‐solid growth mechanism generates defective layer areas underneath droplets that have been formed early in the growth process. The Hall mobility of 1µm thick InN layers, grown in such step‐flow mode is slightly higher than 1400 cm2/Vs while for other growth conditions we have obtained mobility as high as 1904 cm2/Vs at room temperature. The samples exhibit high intensity photoluminescence spectra with a band edge that shifts with free‐carrier concentration. For the lowest carrier concentration of 5.6 × 1017 cm‐3 we observe PL emission at ∼0.64 eV. (© 2008 WILEY‐VCH Verlag GmbH & Co. KGaA, Weinheim)