A high luminance and high output LED package using an LED as a light source and a fabrication method thereof. The LED package includes an Al substrate with a recessed multi-stepped reflecting surface formed therein and a light source composed of LEDs mounted on the reflecting surface and electrically connected to patterned electrodes. The LED package also includes anodized insulation layers formed between the patterned electrodes and the substrate, and an encapsulant covering over the light source of the substrate. The LED package further includes an Al heat radiator formed under the LEDs to enhance heat radiation capacity. According to the present invention, the substrate is made of Al material and anodized to form insulation layers thereon, allowing superior heat radiation effect of the LED, thereby significantly increasing the lifetime and light emission efficiency of the LED package.