In this article, the characteristics of GaN-based LEDs grown on Ar-implanted GaN templates to form inverted Al0.27Ga0.83N pyramidal shells beneath an active layer were investigated. GaN-based epitaxial layers grown on the selective Ar-implanted regions had lower growth rates compared with those grown on the implantation-free regions. This resulted in selective growth, and formation of V-shaped concaves in the epitaxial layers. Accordingly, the inverted Al0.27Ga0.83N pyramidal shells were formed after the Al0.27Ga0.83N and GaN layers were subsequently grown on the V-shaped concaves. The experimental results indicate that the light-output power of LEDs with inverted AlGaN pyramidal shells was higher than those of conventional LEDs. With a 20 mA current injection, the output power was enhanced by 10% when the LEDs were embedded with inverted Al0.27Ga0.83N pyramidal shells. The enhancement in output power was primarily due to the light scattering at the Al0.27Ga0.83N/GaN interface, which leads to a higher escape probability for the photons, that is, light-extraction efficiency. Based on the ray tracing simulation, the output power of LEDs grown on Ar-implanted GaN templates can be enhanced by over 20% compared with the LEDs without the embedded AlGaN pyramidal shells, if the AlGaN layers were replaced by Al0.5Ga0.5N layers.