Microstructural origins of leakage current and physical degradation during operation in product-quality AlGaN/GaN high electron mobility transistor (HEMT) devices were investigated using photon emission microscopy (PEM) and transmission electron microscopy (TEM). AlGaN/GaN HEMTs were fabricated with metal organic chemical vapor deposition on semi-insulating SiC substrates. Photon emission irregularity, which is indicative of gate leakage current, was measured by PEM. Site specific TEM analysis assisted by a focused ion beam revealed the presence of threading dislocations in the channel below the gate at the position showing strong photon emissions. Observation of electrically degraded devices after life tests revealed crack/pit shaped defects next to the drain in the top AlGaN layer. The morphology of the defects was three-dimensionally investigated via electron tomography.