We present a method to introduce a large biaxial tensile strain in an ultra-thin germanium-on-insulator (GOI) using selective oxidation of SiGe epilayer on silicon-on-insulator (SOI) substrate. A circular patterned Si0.81Ge0.19 mesa on SOI substrate with the sidewall protected by Si3N4 or SiO2 is selectively oxidized to generate local 12 nm GOI with high crystal quality, which shows enhanced photoluminescence due to large tensile strain. Direct band photoluminescence peak significantly shifts to longer wavelength as compared to that from bulk Ge due to a combination of strain-induced band gap reduction and quantum confinement effect.