Room-temperature photoreflectance (PR) and photoluminescence (PL) spectra are measured for a series of In0.54Ga0.46P1-yNy/GaAs heterostructures grown on GaAs (100) substrate. Redshifts of the PR and PL peaks indicate that the band gap of In0.54Ga0.46P1-yNy is dramatically reduced as nitrogen is incorporated. The emergence of additional peaks in PR spectra as nitrogen is incorporated indicates that the band alignment switches from type I to type II, due to the lowering of the conduction band, thus forming a two-dimensional electron gas (2DEG) in the interface region between In0.54Ga0.46P1-yNy and GaAs. The band gap energy and transition energies between the confined levels in the 2DEG are determined for samples with various nitrogen concentrations y. The number of confined levels in the 2DEG is found to increase with y; the composition-dependent bowing parameter is determined.