This study investigated the formation mechanism of GeSiGe composite islands on Si(001) using a combination of selective wet chemical etching, atomic force microscopy and high-resolution transmission electron microscopy. After upper Ge-rich parts were removed by selective etching, the etched GeSiGe composite islands exhibited pyramid structures, which differed from the ring-like isocompositional profiles observed in conventional Ge islands. Experimental results demonstrated that the multilayered GeSiGe composite islands were almost defect-free and suffered from a serious SiGe intermixing during growth. The shape and size distribution of composite islands can be further controlled by tuning the island parameters. We elucidate these phenomena on the basis of low surface diffusivity and strain adjustment of the thin Si layer in composite islands. These composite islands were also found to exhibit an apparent enhancement and blueshift in photoluminescence emission. These results indicated that GeSiGe composite islands would be potentially useful as an optoelectronic material operating in the telecommunication range.