The evolution of nano-sized Ni metal islands deposited by electron-beam evaporation on InGaN/GaN multiple quantum wells (MQWs) surface as a function of rapid thermal annealing (RTA) temperature and initial deposited Ni film thickness is reported. It is shown that the dimension and density of self-assembled Ni nano-islands depend critically on the annealing temperature and deposited Ni film thickness. The formation of the islands is described in terms of Ostwald ripening and coarsening mechanisms. Subsequently, the nano-masks are successfully applied to fabricate nanorod InGaN/GaN MQWs by using inductively coupled-plasma (ICP) etching. Uniform etching rate has been obtained by comparing the nanorod height etched for different times. Photoluminescence (PL) investigation shows the nanorod MQWs with optimized light output efficiency could be acquired under particular ICP and RF etching power. Strain relaxation and dislocation reduction effect would contribute to enhanced light output of nanorod InGaN/GaN MQWs compared with the as-grown plane MQWs.