In this work, Ag as a highly reflective mirror layer of gallium nitride (GaN)-based blue vertical light-emitting diodes (VLEDs) has been systematically investigated by correlating scanning electron microscopy/energy dispersive X-ray spectroscopy/transmission Kikuchi diffraction/electron backscatter diffraction, aberration-corrected scanning transmission electron microscopy, and atomic force microscopy techniques. In the context of high-efficiency lighting, three critical aspects have been scrutinized on the nanoscale: (1) chemical diffusion, (2) grain morphology, and (3) surface topography of the Ag layer. We found that nanoscale inhomogeneous distribution of In in InGaN/GaN quantum wells (QWs), interfacial diffusion (In/Ga out-diffusion into the Ag layer and diffusion of Ag into p-GaN and QWs), and Ag agglomeration deteriorate the light reflectivity, which account for the decreased luminous efficiency in VLEDs. Meanwhile, the surface morphology and topographical analyses revealed the nanomorphology of the Ag layer, where a nanograin size of ∼300 nm with special nanotwinned boundaries and an extremely smooth surface of ∼3-4 nm are strongly desired for better reflectivity. Further, on the basis of these microscopy results, suggestions on light extraction optimization are given to improve the performance of GaN-based blue VLEDs. Our findings enable fresh and deep understanding of performance-microstructure correlation of LEDs on the nanoscale, providing guidance to the design and manufacture of high-performance LED devices.