The enhancement of output intensity, the generation of polarized output, and the reduction of the efficiency droop effect in a surface plasmon (SP) coupled vertical light-emitting diode (LED) with an Ag nano-grating structure located between the p-GaN layer and the wafer bonding metal for inducing SP coupling with the InGaN/GaN quantum wells (QWs) are demonstrated. In fabricating the vertical LED, the patterned sapphire substrate is removed with a photoelectrochemical liftoff technique. Based on the reflection measurement from the metal grating structure and the numerical simulation result, it is found that the localized surface plasmon (LSP) resonance induced around the metal grating crest plays the major role in the SP-QW coupling process although a hybrid mode of LSP and surface plasmon polariton can be generated in the coupling process. By adding a surface grating structure to the SP-coupled vertical LED on the n-GaN side, the output intensity is further enhanced, the output polarization ratio is further increased, and the efficiency droop effect is further suppressed.