Nakamura graduated from the University of Tokushima in 1977 with a degree in electronic engineering, and obtained a master's degree in the same subject two years later, after which he joined the Nichia Corporation, also based in Tokushima. It was while working for Nichia that Nakamura invented the first high brightness GaN LED whose brilliant blue light, when partially converted to yellow by a phosphor coating, is the key to white LED lighting, which went into production in 1993.
Previously, J.I. Pankove and co-workers at RCA put in considerable effort, but did not manage to make a marketable GaN LED in the 1960s. The principal problem was the difficulty of making strongly p-type GaN. Nakamura was somewhat luckier than other workers in that another Japanese group led by Professor Isamu Akasaki published their method to make strongly p-type GaN by electron-beam irradiation of magnesium-doped GaN. However, this method was not suitable for mass production and its physics was not well understood. Nakamura managed to develop a thermal annealing method which was much more suitable for mass production. In addition, he and his co-workers worked out the physics and pointed out the culprit was hydrogen, which passivated acceptors in GaN.
At the time, many considered creating a GaN LED too difficult to produce, therefore Nakamura was fortunate that the founder of Nichia, Nobuo Ogawa (1912–2002) was initially willing to support his GaN project. However the company eventually ordered him to suspend work on GaN, claiming it was consuming too much time and money. Nakamura continued to develop the blue LED on his own and in 1993 succeeded in making the device.
He was awarded a Doctor of Engineering degree from the University of Tokushima in 1994. He left Nichia Corporation in 1999 and took a position as a professor of engineering at the University of California, Santa Barbara.
In 2001, Nakamura sued his former employer Nichia over his bonus for the discovery, which was originally ¥20,000 (~US$180). Although Nakamura originally won an appeal for ¥20 billion (~US$180 million), Nichia appealed the award and the parties settled in 2005 for ¥840 million (~US$9 million), at the time the largest bonus ever paid by a Japanese company.