Improving the hole concentration in p-GaN specimens has posed a major challenge due to the high activation energy of Mg doping in GaN. Recently, a delta doping technique for modulating the valence band and increasing the Mg ionization efficiency in GaN has been proposed. However, the memory effect of Mg in the reaction chamber greatly increases the difficulty of epitaxial growth; additionally, the Mg ionization efficiency remains too low. In this study, we demonstrate a novel p-GaN/AlN/AlGaN structure with an increased Mg ionization efficiency, from 5.16% to 14.22%, relative to the conventional p-GaN/AlGaN structure. The inserted AlN layer effectively modulates the valence band of p-GaN near the p-GaN/AlN interface and decreases the activation energy, as confirmed by density functional theory and the 1D Poisson–Schrodinger equation. Moreover, a high-performance p-channel GaN FinFET with a high output current of 114 mA/mm is fabricated, and the polarization-enhanced epitaxial layer shows great promise for next-generation digital ICs.