We have studied transmission electron microscopy (TEM) cross sections and plan views of YBaCuO films on SrTiO3 single‐crystal substrates at various stages of post‐deposition anneal. These TEM studies reveal in extraordinary detail the process of nucleation of epitaxial crystal structure characteristic of the films. In partially annealed samples sputtered from separate Cu, Y, and BaF2 sources, we see the 2‐4‐8 phase nucleates at the substrate interface, with the c axis parallel to the  substrate direction (surface normal). Upon further annealing, the 1‐2‐3 phase nucleates on this layer with the c axis parallel to each of the , , and  substrate directions. Rapid growth in the a‐ and b‐axis directions results in an uneven ‘‘basket weave’’ surface texture. This information is crucial to the successful control and optimization of crystal orientation and surface morphology of superconducting thin films necessary for the application of this material to multilayer structures for electronic devices.