A multienergy oxygen ion implantation process was demonstrated to be compatible with the processing of high-power microwave AlGaN/GaN high electron mobility transistors (HEMTs). A high sheet resistivity and thermally stable isolation were demonstrated. The microstructures of implanted and postannealed specimens were investigated by transmission electron microscopy (TEM). The dependences of the sheet resistivity and different postannealing temperatures were correlated with the defect clusters and microstructure of lattice stacking faults. After 300 °C annealing, the sheet resistivity was higher than 1012 Ω/square, which was attributed to the severe defect interaction eliminating the trapping centers and reducing the leakage current. A maximum output power density of 5.3W/mm at Vgs =-4V and V ds = 50V at 3GHz was demonstrated on lag-free HEMTs without field plates on sapphire substrate.