The growth rate and temperature dependence on microcrack formation in YBCO thin films prepared by pulsed laser deposition on MgO (100) substrate is systematically investigated by varying the laser pulse frequency between 1 and 20 Hz and the deposition temperature between 650°C and 850°C. Atomic force microscopy shows that when the growth temperature is high enough, ≥ 800°C, the higher thermal energy and increased surface mobility during the growth induce a process where adsorbed atoms have more time to find energetically optimal sites, which again result in microcrack formation along the diagonal of a/b-directions in the film. In case of MgO substrate where lattice mismatch in the orthorhombic phase is 8.5% and YBCO grows under tensile strain on it, the growth of YBCO relaxes by rotating the unit cells by 45° in-plane from the substrate (100) and/or (010) directions. The structural defects and reorganization of the material reflect also in the superconducting properties, which are clearly suppressed at high deposition temperatures and with the increasing growth rate. These effects should be taken into account when the pinning structure and superconducting properties of YBCO are optimized for future applications realized on single crystal substrate having small dielectric constant.