For GaN-based vertical-cavity surface-emitting lasers (VCSELs), a suitable current confinement layer is essential for high-performance devices. The effect of different current confinement layers, including SiO2, AlN, and diamond, on the performance of GaN-based VCSELs was compared through simulation. The devices’ heat dissipation and current confinement characteristics were analyzed based on the electro-opto-thermal model. Considering thermal management, the diamond was a better candidate under high injected current. Benefiting from the excellent heat dissipation, the device with diamond shows a significant improvement in output power and the thermal roll-over current. This work gives a superior option for the current confinement layer and can be helpful for future design and fabrication of high-power GaN-based VCSELs.