Heteroepitaxial Si/CoSi2/Si structures have been synthesized by implanting 170‐keV Co+ with doses in the range 1–3×1017 Co+ions/cm2 into (100) and (111) Si substrates and subsequent annealing. The microstructure of both the as‐implanted and annealed structures is investigated in great detail by transmission electron microscopy, high‐resolution electron microscopy, and x‐ray diffraction. In the as‐implanted samples, the Co is present as CoSi2 precipitates, occurring both in aligned (A‐type) and twinned (B‐type) orientation. For the highest dose, a continuous layer of stoichiometric CoSi2 is already formed during implantation. It is found that the formation of a connected layer, already during implantation, is crucial for the formation of a buried CoSi2 layer upon subsequent annealing. Particular attention is given to the coordination of the interfacial Co atoms at the Si/CoSi2 (111) interfaces of both types of precipitates. We find that the interfacial Co atoms at the A‐type interfaces are fully sevenfold coordinated, whereas at the B‐type interfaces they appear to be eightfold coordinated. It is shown that these interface configurations introduce defects in the three‐dimensional CoSi2 precipitates and Si matrix. As a result, the nuclei are subjected to compressive strain. It is argued that the combination of interface energy and strain results in a larger stability of small B‐type nuclei as compared to A type. When the precipitates grow beyond a critical size of some 20–30 nm, A‐type precipitates become more stable, finally resulting in a buried layer of aligned orientation if the layer thickness is larger than about 30 nm. If smaller, it is argued that upon prolonged annealing the layer will have a twinned orientation (B type). An- nealed layers of aligned orientation in (100) Si are found to contain interfacial dislocations of edge type with Burgers vectors b=a/4〈111〉 and b=a/2〈100〉. These dislocations are associated with boundaries separating domains having different interface structures. For (111) Si, there exist edge‐type dislocations with Burgers vector b=a/2〈110〉. The final state of strain can be attributed to the difference in thermal expansion between CoSi2 and Si. The strain at room temperature corresponds to a fully relaxed layer at about 700 °C. Below this temperature, dislocations become immobile.