The traditional plasma etching process for defining micro-LED pixels could lead to significant sidewall damage. Defects near sidewall regions act as non-radiative recombination centers and paths for current leakage, significantly deteriorating device performance. In this study, we demonstrated a novel selective thermal oxidation (STO) method that allowed pixel definition without undergoing plasma damage and subsequent dielectric passivation. Thermal annealing in ambient air oxidized and reshaped the LED structure, such as p-layers and InGaN/GaN multiple quantum wells. Simultaneously, the pixel areas beneath the pre-deposited SiO2 layer were selectively and effectively protected. It was demonstrated that prolonged thermal annealing time enhanced the insulating properties of the oxide, significantly reducing LED leakage current. Furthermore, applying a thicker SiO2 protective layer minimized device resistance and boosted device efficiency effectively. Utilizing the STO method, InGaN green micro-LED arrays with 50-, 30-, and 10-µm pixel sizes were manufactured and characterized. The results indicated that after 4 h of air annealing and with a 3.5-μm SiO2 protective layer, the 10-µm pixel array exhibited leakage currents density 1.2 × 10−6 A/cm2 at −10 V voltage and a peak on-wafer external quantum efficiency of ~6.48%. This work suggests that the STO method could become an effective approach for future micro-LED manufacturing to mitigate adverse LED efficiency size effects due to the plasma etching and improve device efficiency. Micro-LEDs fabricated through the STO method can be applied to micro-displays, visible light communication, and optical interconnect-based memories. Almost planar pixel geometry will provide more possibilities for the monolithic integration of driving circuits with micro-LEDs. Moreover, the STO method is not limited to micro-LED fabrication and can be extended to design other III-nitride devices, such as photodetectors, laser diodes, high-electron-mobility transistors, and Schottky barrier diodes.