The underlying GaN layers on which laser diodes are fabricated have been improved through two steps. In the first step, GaN single layer on sapphire was investigated. The residual strain and etch pit density were measured. We found that they reflect the optical quality. We found that the threading dislocation can be reduced to 4 × 108 cm−2. The optical quality depends on the residual strain and dislocation density. In the next step, we have utilized epitaxial lateral overgrowth ELO) technique. The optimized GaN layer on sapphire with the smallest dislocation density was used as seed layer. In the wing region of ELO-GaN, the threading dislocation density was reduced to 1 × 106 cm−2. On the other hand, in the seed region, dislocation density remained 4 × 108 cm−2. Photoluminescence intensity in the wing region was three times as large as that in the seed. The laser diodes were fabricated on the ELO-GaN layer, so that the ridge stripe was fabricated over the wing region, and its properties were compared with those of laser diodes on sapphire. It was found that the lifetime can be increased by using the ELO-GaN layer as the underlying layer.