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In recent years, the on-resistance, power loss and cell density of Si power devices have not exhibited significant improvements, and performance is approaching the material limits. GaN is considered an attractive material for future high-power applications because of the wide band-gap, large breakdown field, high electron mobility, high switching speed and low on-resistance. Here we report on the Ohmic contact resistance and reversebias characteristics of AlGaN/GaN Schottky barrier diodes with and without annealing. Annealing in oxygen at 500℃ resulted in an increase in the breakdown voltage from 641 to 1,172 V for devices with an anode-cathode separation of 20 μm. However, these annealing conditions also resulted in an increase in the contact resistance of 0.183 Ω-mm, which is attributed to oxidation of the metal contacts. Auger electron spectroscopy revealed diffusion of oxygen and Au into the AlGaN and GaN layers following annealing. The improved reverse-bias characteristics following annealing in oxygen are attributed to passivation of dangling bonds and plasma damage due to interactions between oxygen and GaN/AlGaN. Thermal annealing is therefore useful during the fabrication of high-voltage GaN devices, but the effects on the Ohmic contact resistance should be considered.