Various orientations of YBa2Cu3O7-x grains in polycrystalline films prepared on (001)MgO substrates by in situ laser deposition were determined using electron diffraction. Eight different types of in‐plane orientations have been observed. These orientations agree well with the prediction of a simplified theory of near coincidence site lattice between YBa2Cu3O7-x and MgO. The YBa2Cu3O7-x grains were found to have a high probability of forming low angle or low Σ boundaries among themselves. These grain boundaries are of low energy and should exhibit a high connectivity of Cu‐O‐Cu chains. Therefore, YBa2Cu3O7-x thin films on MgO can attain a Tc of ∼90 K and a Jc of ∼106 A/cm2 at 77 K.