We have studied the characteristics of blue InGaN/GaN multiquantum-well light-emitting diodes (LEDs) after reducing the length of the lateral current path through the transparent layer through formation of a peripheral high-resistance current-blocking region in the Mg-doped GaN layer. To study the mechanism of selective activation in the Mg-doped GaN layer, we deposited titanium (Ti), gold (Au), Ti/Au, silver, and copper individually onto the Mg-doped GaN layer and investigated their effects on the hole concentration in the p-GaN layer. The Mg-doped GaN layer capped with Ti effectively depressed the hole concentration in the p-GaN layer by over one order of magnitude relative to that of the as-grown layer. This may suggest that high resistive regions are formed by diffusion of Ti and depth of high resistive region from the p-GaN surface depends on the capped Ti film thickness. Selective activation of the Mg-doped GaN layer could be used to modulate the length of the lateral current path. Furthermore, the external quantum efficiency of the LEDs was improved significantly after reducing the lateral current spreading length. In our best result, the external quantum efficiency was 52.3% higher (at 100 mA) than that of the as-grown blue LEDs.