Micro-LEDs show the size-dependent external quantum efficiency (EQE) reduction problem, mainly owing to increased non-radiative recombination loss at the sidewall for smaller chip size. In this work, the evolution of microstructure, surface potential and optical performance of the green micro-LED sidewall was investigated comparatively after inductively coupled plasma (ICP) and tetramethylammonium hydroxide (TMAH) etching through transmission electron microscopy (TEM), Kelvin probe force microscope (KPFM), cathodoluminescence (CL) and time-resolved photoluminescence (TRPL). As confirmed by TEM and geometric phase analysis (GPA), ICP etching causes sidewalls to form atomically rough semi-polar surfaces and increases 25% compressive strain at the sidewall compared to the inside. TMAH solution introduces new sidewall defects due to excessive etching of three atomic layers of InGaN. Holes accumulate at the surface because of build-in electric field as showed by KPFM. The sidewall defects lead to a decrease in carrier lifetime resulting in uneven luminescence of micro-LED mesa. TMAH treatment removes the damaged layer and reduces the non-radiative recombination rate. ICP causes damage to the nanoscale structure, however the influence of sidewall defects on the carrier behavior is in the micron range due to unavoidable surface dangling bonds and surface lattice relaxation. A non-radiative recombination mechanism is proposed based on strain relaxation.