The invention provides a light emitting diode epitaxial wafer and a manufacturing method thereof. The epitaxial wafer comprises a substrate, a buffer layer, an undoped u-GaN layer, an N-type GaN layer, a stress release layer, a multi-quantum well layer, an electron barrier layer and a P-type GaN layer, the multi-quantum well layer comprises a front insertion layer, a quantum well layer, a rear insertion layer and a quantum barrier layer; the front insertion layer comprises an In < x > N < 1-x > layer and an In < y > Ga < 1-y > N layer, and the contact surface of the In < x > N < 1-x > layer and the In < y > Ga < 1-y > N layer is processed by H2 to form a hole and processed by NH3 to form an N polar surface; the rear insertion layer comprises an Al < z > Ga < 1-z > N layer and a GaN layer, the surface, in contact with the Al < z > Ga < 1-z > N layer, of the quantum well layer is subjected to NH3 treatment to form an N polar surface, and the surface, in contact with the quantum barrier layer, of the GaN layer is subjected to H2 treatment. According to the invention, the problems of low luminous efficiency and low wavelength uniformity of the existing light-emitting diode are solved.