We report on the effect of oxygen annealing for GaN surface on the Schottky barrier configuration and leakage current in Ni-AlGaN/GaN Schottky barrier diodes. After oxygen annealing, their turn-on voltage and reverse- bias leakage current characteristics are significantly improved due to a reduction in the Schottky barrier height (SBH) and suppression in the surface states respectively. Interface state density extracted from the Terman method was reduced by 2 orders of magnitude. X-ray photoelectron spectroscopy measurements show that the oxygen annealing induces Ga2O3 on the GaN surface. The formation of Ga2O3 reduces the interface state density as well as lowers the SBH through the modification of hybridized metal induced gap states. (C) 2015 Elsevier B.V. All rights reserved.