The aluminum (Al)-doped ZnO (AZO) films embedded with Al nanoclusters were employed to enhance the light output power of III-nitride-based light-emitting diodes (LEDs). The ZnO and Al targets were sputtered using a magnetron cosputtering system. Al nanoclusters embedded in AZO films were found in the AZO films deposited with Al dc power of 10 W and ZnO rf power of 100 W using high resolution transmission electron microscopy. An increase of 20% in the light output power of the GaN-based LEDs with AZO films embedded with Al nanoclusters can be obtained compared to the conventional LEDs operated at 500 mA.