It is of great technological importance to develop high quality III-Nitride layers and optoelectronic devices on Si substrates due to its low cost and wide availability as well as use of the highly matured Si microtechnology. Here we report on a novel scheme of substrate engineering to obtain high quality GaN layers on Si substrates. An ion implanted defective layer is formed in the substrate that partially isolates the III-Nitride layer from Si substrate and helps to reduce the strain in the film. The experimental results show substantial decrease in crack density, indicative of high interfacial tensile strain, with an average increase in the crack separation of 190 μm with crack free regions of 0.18 mm2 for a 2 μm thick GaN film. The optical quality and strain reduction in GaN film show strong dependence on the implantation conditions and the thickness of buffer layer. Moreover the GaN film grown on implanted AlN/Si substrate has better optical properties as compared to non implanted AlN/Si. In this paper we will show how the above mentioned scheme can resolve the issues related to cracks and dislocation density in the film that are detrimental to GaN based optoelectronic devices.