Si‐implanted GaAs was successfully annealed with silicon oxynitride (SiOxNy) encapsulant. By using SiOxNy encapsulant with about 1.75 refractive index, a maximum electrical activation of 87%, which is 30–50% higher than that obtained after SiO2 or Si3N4 capped annealing, was achieved on Si‐implanted GaAs (5×1012 cm−2, 100 keV). In addition, electrical activation after SiOxNy capped annealing remains constant against the variation of film thickness up to 2300 Å, indicating minimized interfacial stress between SiOxNy film and GaAs substrate. A maximum carrier concentration of 2.5×1018 cm−3, which is the highest value ever reported on Si‐implanted GaAs, was obtained after SiOxNy capped annealing for 7×1013 cm−2 dose. The controlled amount of Ga outdiffusion in combination with the reduced interfacial stress is considered to be responsible for this high electrical activation.