Output performance and internal quantum efficiency of an InGaN light emitting diode (LED）using thin AlGaN as strain-compensated layer is theoretically investigated.The result shows that a significant improvement can be obtained when the strain-compensated InGaN-AlGaN quantum well structure is utilized as quantum well active layer at low and high temperature.The enhancement of the LED performance is mainly attributed to the decrease in electronic leakage current.Qualitative optimization of the thickness and Al composition in the AlGaN strain-compensated layer is also studied.The calculation indicates that the strain-compensated InGaN-AlGaN quantum well structure LED can provide better output characteristics and internal quantum efficiency when the AlGaN layer thickness is 1nm and Al composition is 25%.