The mechanism for thermally stable indium-containing silver [Ag(In)] Ohmic contact on p-type GaN has been investigated. The specific contact resistivity as low as 3.8×10−5 Ω cm2 and a high reflectance of 88.4% at a 460 nm wavelength were obtained by annealing Ag(0.5 wt % In) alloy contact at 450 °C in air ambient. The In atoms in Ag matrix made In–O chemical bonds, producing a tensile stress in the film. This compensated thermal compressive stress built in the Ag film. As a result, In atoms in Ag film play a role in preventing Ag contact from agglomeration, leading to high reflectance and good thermal stability.