We have studied the effect of rapid thermal annealing (RTA) on highly strained InGaAs/GaAs quantum wells by using photoluminescence (PL) and double-crystal X-ray diffraction (DCXRD) measurements. It is found that a distinct additional PL emission peak can be observed for the annealed samples. This PL emission possesses features similar to the PL emission from InGaAs/GaAs quantum dots (QDs) with the same indium content. It is proposed that this emission stems from QDs, which were formed during the annealing process. This formation is attributed to the favorable diffusion due to the inhomogeneous strain distribution in the InGaAs layer intersurface. The DCXRD measurements also confirm that the dominant relaxation is strain enhanced diffusion under the low annealing temperatures.