The influence of a p-In0.06Ga0.94N cap layer grown on p-GaN on the device performance of GaN-based light-emitting diodes (LEDs) was investigated. Compared to conventional p-GaN LED structure, the light output power of p-InGaN/GaN structure LED was enhanced by 20% and the operating voltage decreased from 3.81 to 3.29 V under 20 mA injection current. Based on surface morphology and electrical analysis, these improvements were mainly attributed to the higher light extraction efficiency and lower contact resistence. It was observed that V-shaped pits appearing on the surface of p-InGaN increased surface roughness, resulting in higher extraction efficiency. After molten KOH etching to p-InGaN layer, the V-shaped pits became bigger, further increasing surface roughness. The larger surface roughness further increased light output power from 20% to 44%. In addition, the forward voltage under 20 mA increased from 3.29 V to 3.41 V which indicated etching process decreased the surface ohmic contact.