A light emitting diode having high light extraction efficiency and a method of manufacturing the same are provided. The LED includes a semiconductor multiple layer including an active layer; a transparent electrode layer formed on the semiconductor multiple layer; and refraction field unit embedded in the transparent electrode layer and formed of a material having a different refractive index than the transparent electrode layer. The method of manufacturing the LED includes: crystallizing and growing a semiconductor multiple layer having an active layer on a substrate; evaporating a first transparent electrode layer onto the semiconductor multiple layer; forming a plurality of grooves in the first transparent electrode layer by patterning and etching the first transparent electrode layer; and evaporating a second transparent electrode layer onto the first transparent electrode layer at an angle to the grooves to form cavities filled with air between the first transparent electrode layer and the second transparent electrode layer.