In this study, we investigated enhance mode (E-mode) p-GaN/AlGaN/GaN high-electron-mobility transistors (HEMTs) with an Al0.5GaN etch-stop layer. Compared with an AlN etch-stop layer, the Al0.5GaN etch-stop layer not only reduced lattice defects but engendered improved DC performance in the device; this can be attributed to the lattice match between the layer and substrate. The results revealed that the Al0.5GaN etch-stop layer could reduce dislocation by 37.5% and improve device characteristics. Compared with the device with the AlN etch-stop layer, the p-GaN HEMT with the Al0.5GaN etch-stop layer achieved a higher drain current on/off ratio (2.47 × 107), a lower gate leakage current (1.55 × 10−5 A/mm), and a lower on-state resistance (21.65 Ω·mm); moreover, its dynamic RON value was reduced to 1.69 (from 2.26).