Phosphide-based thin-film light-emitting diodes (TF-LEDs) lattice-matched to GaAs are well established in optoelectronics in the wavelength range between 550 and 650 nm. In this work, we investigate the impact of oxidized AlAs to overlying phosphide-based pseudomorphically grown epitaxial structures. Oxidation of a buried AlAs sacrificial layer allows the separation of the grown TF-LED epitaxy from its substrates and enables an oxidation lift-off process. To evaluate the strain effect of progressing oxidation on the structure of the chip, we perform high-resolution x-ray diffraction analysis on as-grown, mesa-structured, semi-oxidized, and completely laterally oxidized chips. At each state, a pseudomorphic phosphide-based InAlP layer is found. The InAlP layer exhibits a tensile out-of-plane strain of approximately 0.20% and a compressive in-plane strain of approx. −0.19%. Additionally, scanning transmission electron microscopy, energy-dispersive x-ray spectroscopy, and μ-photoluminescence were used for investigation of the boundary zone of the oxidation front of AlAs, the interfaces between phosphide-based semiconductors (InAlP/InGaAlP) and oxidized amorphous AlAs and the light emission of InGaAlP multiple quantum wells.