Photoelectrochemical (PEC) etching technique has been proven to be an effective method to etch GaN. Despite its success, investigations on etching-induced damage are still scare. In this work, the damage induced by PEC etching of GaN in KOH electrolyte was studied. Photoluminescence (PL) spectroscopy was used to explore the origin of etching-induced damaged layer. From the variable temperature PL measurements, the origin of etching-induced damage was attributed to be the defect complex of VGa-ON (gallium vacancy bonds to oxygeon on nitrogen antisite). With determination of the defect origin, the electronic transition in the etch damage-related yellow luminescence (YL) band was suggested to be deep donor-like state to shallow-acceptor transition. In addition, a post-treatment method with boiled KOH chemical etching was developed to remove the thin damaged layer. In this method, crystallographic etching characteristics of boiled KOH was observed to assist in the formation of smooth sidewall facets. As revealed by the reduction of yellow luminescence, we propose this novel technique as a near damage-free etching method.