Many of the methods that have been successfully used to pattern quantum wells for confinement of excitons within quantum wires'-' can in principle be used to produce ar- rays of quantum dots. In practice, difficulties arise in the application of many of these methods. There has been sig- nificant progress in the reduction of defects in a number of techniques for patterning planar quantum wells, for in- stance as demonstrated by recent studies of etching and regrowth.8'9 While the problem of free surfaces and gener- ation of nonradiative defects is avoided with methods for growing laterally confined structures, size fluctuations within an array are expected to be more severe for dots than for wires. Indeed, to our knowledge, the only report of the resolution of quantum dot levels in III-V semicon- ductors has been for structures produced by patterned ion implantation.' With confinement by strain modulation one can avoid the difficulties mentioned above.'*" Patterned strain im- posed on the underlying well by patterning of a stressor layer produces a lateral potential well for excitons."t0-12 Here, we report the first observation of quantum dot levels produced by strain modulation. The dependence of the depth of the lateral potential well on dot size, measured directly by photoluminescence (PL) red shifts, and of the magnitude of the dot level splittings, is in agreement with a simple calculation of the band edge modulation in these structures. In addition, we observe evidence for the frus- tration of acceptor recombination upon lateral confine- ment. Finally, as a consequence of the high radiative re- combination efficiency, we observe luminescence from a single quantum dot. The sample