The influence of process parameters and template characteristics on the morphology and optical properties of self-assembled nanostructures produced by dry etching from GaN/sapphire templates was investigated. It was found that the chemical component in the etching gas–chlorine supports the formation of nanostructures and that a minimum amount of RF and ICP power (i.e., energy) is necessary. Additionally the crystalline imperfection and the doping concentration of the template greatly affect the nanostructure morphology. All nanostructures exhibit higher luminescence intensity than the templates they are fabricated from and exhibit a red-shift of the luminescence with respect to the epilayer. The results indicate effective strain relaxation as well as more efficient absorption of the incoming photons the smaller the nanostructures become.