A laser diode includes a substrate, an epitaxial structure, an electrode contacting layer and an optical cladding layer. The epitaxial structure is disposed on the substrate, and is formed with a ridge structure opposite to the substrate. The electrode contacting layer is disposed on a top surface of the ridge structure. The optical cladding layer has a refractive index smaller than that of the electrode contacting layer The optical cladding layer includes a first cladding portion which covers side walls of the ridge structure, and a second cladding portion which is disposed on a portion of the top surface of the ridge structure. A method for manufacturing the abovementioned laser diode is also disclosed.