AbstractNonlinearity compensation is very important when using an LED source for video transmission. In general, wideband negative optoelectronic feedback makes a high‐quality, low‐distortion, adjustment‐free light source possible. However, when attempting to apply this technique to the LED, a stable feedback loop design is difficult to achieve because of the poor coupling efficiency between the LED and the external photodetector. We have resolved this problem via a monolithic integration of the LED and PD, and realized a low‐distortion LED by the addition of an external negative feedback circuit. The LED, PD composite device is a hybrid fabricated with LPE for the LED and MOCVD for the PD. A signal transmission efficiency of 2 percent was achieved between the LED and PD. This is more than an order of magnitude larger than the efficiency attainable with conventional discrete components, and rivaling what can be done with an LD. Evaluation of the video transmission quality showed an improvement in the differential gain and phase from 8 percent and 2.5° to 1 percent and 0.5°, and also automatic compensation was available for line and frame slope and improved frequency response flatness in the passband. With this method of LED distortion reduction, the conventional predistortion or frequency compensation circuits and their adjustments are no longer necessary, and a low‐cost, high‐quality LED source becomes possible.