Self-heating in high-power vertical-cavity surface-emitting lasers (VCSELs) is an important influence factor for device characteristics. In order to improve device heat dissipation, a 980 nm high-power VCSEL on AlN film passivation layer is fabricated. The analog simulation and analysis on the high-power VCSEL show that the AlN film passivation layer can improve the temperature distribution inside high-power VCSEL, reduce the thermal resistance of VCSEL and enhance the ability of heat dissipation. The AlN film passivation layer and the SiO2 film passivation layer high power VCSELs both with 200 μm aperture have been made by the same processes on the same epitaxial wafer. The two kinds of high power VCSELs have been tested comparatively, and the testing results show that the output power of the VCSEL on AlN film passivation layer is 470 mW at room temperature, which is 140 mW higher than that of the device on the SiO2 film passivation layer. It can operate at higher temperature up to 80 ℃ and has much better temperature and opto-electric characteristics.