The invention discloses a light emitting diode epitaxial wafer and a manufacturing method thereof, and belongs to the technical field of semiconductors. The epitaxial wafer comprises an insertion layer, a low-temperature P-type layer, an electron blocking layer, a high-temperature P-type layer and a P-type contact layer which are sequentially stacked on a multi-quantum well layer; the insertion layer is an AlN layer, the low-temperature P-type layer is a Mg-doped AlGaN/GaN superlattice structure or Mg-doped AlGaN/InGaN superlattice structure, the AlN layer is matched with the low-temperature P-type layer, the effect of a part of the electron blocking layer can be shared, and the thickness of the electron blocking layer can be reduced, so that the blocking effect on the hole is reduced, andmore holes can emit light by combining with electrons on the multi-quantum well layer, and the internal quantum light-emitting efficiency of the LED is improved. The total thickness of the insertionlayer, the low-temperature P-type layer, the electron blocking layer, the high-temperature P-type layer and the P-type contact layer is 40-100 nm, the thickness of the P-type layer is reduced, and theexternal quantum light-emitting efficiency of the LED is improved.