First-principles pseudopotential plane-wave calculations are used to investigate the electronic properties of InxGa1-xN alloys. The alloys are described within a cluster-expansion method considering configurations in large 64-atom supercells. The unusual behavior of the gap bowing is discussed as a function of composition. We show that the strongest contribution to the gap bowing is due to a structural effect, i.e., the composition-induced disorder in the bond lengths. We explain the observed huge Stokes shifts by band gap variations due to composition fluctuations and phase separation. © 2002 American Institute of Physics.