Although the method of inserting colloidal quantum dots (QDs) into deep nano-holes fabricated on the top surface of a light-emitting diode (LED) has been widely used for producing effective Förster resonance energy transfer (FRET) from the LED quantum wells (QWs) into the QDs to enhance the color conversion efficiency, an important mechanism for enhancing energy transfer in such an LED structure was overlooked. This mechanism, namely, the nanoscale-cavity effect, represents a near-field Purcell effect and plays a crucially important role in enhancing the color conversion efficiency. Here, we demonstrate the results of LED performance, time-resolved photoluminescence (TRPL), and numerical simulation to elucidate the nanoscale-cavity effect on color conversion by inserting a photoresist solution of red-emitting QDs into the nano-holes fabricated on a blue-emitting QW LED. Based on the TRPL study of the inserted QDs in a nano-hole structure fabricated on an un-doped GaN template of no QW, it is found that the emission efficiency of the inserted QDs is significantly increased due to the nanoscale-cavity effect. From the simulation study, it is confirmed that this effect can also increase the FRET efficiency, particularly for those radiating dipoles in the QWs oriented perpendicular to the sidewalls of the nano-holes. In the nanoscale-cavity effect, the enhanced near field distribution inside a nano-hole excited by a light emitter modifies its own radiation behavior through the Purcell effect such that its far-field emission becomes stronger.