We propose a stepped upper waveguide layer (UWG) to improve the hole injection efficiency of GaN-based laser diodes (LDs), and investigate its effect on the performance of LDs from experiments and theoretical calculations. The experimental characterization of the LD with stepped UWG presents a decrease of 16.6% for the threshold current as well as an increase of 41.2% for the slope efficiency compared to the LD with conventional GaN UWG. Meanwhile, strong localized effects are found in the quantum wells of LD with stepped UWG and a large blue-shift in the electroluminescence (EL) spectra below the threshold by analyzing the differential efficiency and the EL spectra. The large blue shift implies a stronger polarization field in the LDs, which may affect the injection of holes. Additionally, the simulation results demonstrate that the LD with stepped UWG achieves higher hole injection efficiency by modulating the valence band, and the hole current density injected into the quantum wells reaches 6067 A/cm2.