We have developed a virtual GaN substrate on sapphire based on a two-step growth method. By optimizing the growth scheme for the virtual substrate we have improved crystal quality and reduced interface roughness. Our Al0.22Ga0.78N/GaN HEMT structure grown on the optimized semi-insulating GaN virtual substrate, exhibits Hall mobilities as high as 1720 and 7350 cm(2)/Vs and sheet carrier concentrations of 8.4 x 1012 and 10.0 x 1012 cm(-2) at 300 K and 20 K, respectively The presence of good AlGaN/GaN interface quality and surface morphology is also substantiated by X-Ray reflectivity and Atomic Force Microscopy measurements. A simplified transport model is used to fit the experimental Hall mobility. (c) 2006 Elsevier B.V. All rights reserved.