We propose an Ag reflector layer with an AgCu alloy layer as a thermally reliable reflector for high power flip-chip and vertical light emitting diodes (LEDs). By annealing the deposited Ag and Cu layers, intermixed grains and grain boundaries from the alloyed AgCu layer were formed on the LEDs, and CuO nano dots precipitated at the grain boundaries. A thick AgCu layer was deposited to cover the AgCu alloy layer. The precipitation of the CuO nano dots at the grain boundaries suppressed Ag agglomeration, leading to enhanced light reflectance after the annealing process. Consequently, the alloyed AgCu/Ag reflector produced by annealing at a high temperature of 500 °C demonstrated a higher reflectance of 78% and a lower contact resistance of 7.0 × 10-5 Ω · cm2.