Here, we report vertical-type GaN nanowire-based light-emitting diodes (LEDs) fabricated by the metal-catalyzed vapor–liquid–solid (VLS) method. The nickel-catalyzed VLS process yielded both n-GaN nanowires and GaN nanoislands on substrates. The nanoislands markedly deteriorated the diode and electroluminescent characteristics in n-nanowire/p-film LED structures because of parasitic resistance and deep level emission caused by nanoislands. By burying the nanoislands with an insulating layer and adopting coaxial p–n junction nanowire structures, nanowire-based LEDs were shown to exhibit superior device performance, including highly rectifying and monochromatic electroluminescent characteristics. Thus, the undesirable effects associated with nanoislands were considerably suppressed. This work provides a rationale for designing high-performance vertical nanowire-based LEDs.