An elastoplastic phase field model is developed to investigate the role of lateral confinement on morphology of thin films grown heteroepitaxially on patterned substrates. Parameters of the model are chosen to represent InxGa1-xAs thin films growing on GaAs patterned with SiO2. We determined the effect of misfit strain on morphology of thin films grown in 0.5-μm patterns with non-uniform deposition flux. Growth of islands inside patterns can be controlled by non-uniformity of deposition flux, misfit strain between film and the substrate, and also strain energy relaxation due to plastic deformation. Our results show that the evolution of island morphology depends non-monotonically on indium content and associated misfit strain due to coupling between the plastic relaxation and the confinements effects. Low indium concentration (0%-40%) causes formation of instabilities with relatively long wavelengths across the width of the pattern. Low surface diffusion (due to low indium concentration) and fewer islands across the pattern (due to small misfit strain) lead to formation and growth of islands near the walls driven by overflow flux. Further increase in indium concentration (40%-75%) increases the lattice mismatch and surface diffusivity of the film, and also activates plastic deformation mechanism, which leads to coalescence of islands usually away from the edges. By further increasing the indium concentration (up to 100%), plastic deformation relaxes most of the strain energy density of the film, which prevents formation of instabilities in the film. Hence, in this case, islands are only formed near the walls. © 2014 AIP Publishing LLC.