A model for island formation in submonolayer epitaxy has been studied in th
e presence of elastic strain by means of a Monte Carlo simulation. The desc
ription, based on rate equations, leads to scaling predictions for cluster
statistics and diffusion rates. We generalize these predictions to include
the effects of the repulsive elastic interaction. The elastic interaction i
s caused by the deformation of the underlying substrate and has a repulsive
1/r(3) character. To enable the efficient simulation of multiparticle surf
ace diffusion with long-range interaction, we employ a multigrid scheme. On
e particular result is that, with increasing elastic repulsion between the
adsorbed particles, the formation of islands is hampered, and island nuclea
tion is deferred to higher coverage values.