Abstract Embedding p-type gallium nitride (p-GaN) with controlled Mg out-diffusion in adjacent epitaxial layers is a key for designing various multi-junction structures with high precision and enabling more reliable bandgap engineering of III-nitride-based optoelectronics and electronics. Here, we report, for the first time, experimental evidence of how nanoporous GaN (NP GaN) can be introduced as a compensation layer for the Mg out-diffusion from p-GaN. NP GaN on p-GaN provides an ex-situ formed interface with oxygen and carbon impurities, compensating for Mg out-diffusion from p-GaN. To corroborate our findings, we used two-dimensional electron gas (2DEG) formed at the interface of AlGaN/GaN as the indicator to study the impact of the Mg out-diffusion from underlying layers. Electron concentration evaluated from the capacitance-voltage measurement shows that 9 × 10¹² cm⁻² of carriers accumulate in the AlGaN/GaN 2DEG structure grown on NP GaN, which is the almost same number of carriers as that grown with no p-GaN. In contrast, 2DEG on p-GaN without NP GaN presents 9 × 10⁹ cm⁻² of the electron concentration, implying the 2DEG structure is depleted by Mg out-diffusion. The results address the efficacy of NP GaN and its’ role in successfully embedding p-GaN in multi-junction structures for various state-of-the-art III-nitride-based devices.