In this paper, we optimize the AlGaN surface oxidation methods for AlGaN/GaN heterostructure field effect transistor (HFET) biological sensors. Reactive ion etching oxygen plasma, inductively coupled oxygen plasma, and piranha solution are used to oxidize AlGaN surface. After oxidation, X-ray photoelectron spectroscopy and water contact angle measurements are used to check oxidation effectiveness. Labeled streptavidin (SA) molecules are bound to the oxidized surface through linker molecules for comparison of surface modification effectiveness. Schottky diodes are fabricated to investigate the impacts of oxidation processes on electrical properties, such as Schottky barrier heights, sheet carrier concentrations, and interface trap densities. The results show that the inductively coupled plasma oxidation process has a superior behavior compared to the reactive ion etching oxygen plasma and piranha solution oxidation processes. AlGaN/GaN HFET protein sensors fabricated using the inductively coupled plasma oxidation process have exhibited improved sensitivity. An SA solution with the concentration as low as 4.73 pM were successfully detected.