The dependence of compensation mechanism in $P^+$-InGaAs layer implanted with oxygen on the annealing temperatures was investigated. The oxygen implantation was performed for electrical isolation. The conductivity was controlled by damage related traps below $500^{circ}C$. For the temperature of 500 to $600^{circ}C$, oxygen began to show the chemical effect of compensating the acceptors due to activation and type conversion (plongrightarrown-type) occurred at $600^{circ}C$. This indicates that the defects generated by the chemical activity of oxygen increased with increasing annealing temperature, where activation energy of 24.2 meV was obtained. It is attributed to the formation of native defects, such as In interstitials, acting as shallow donor in InGaAs. Above $600^{circ}C$, the interstitial Be atoms become reactivated and the n-type conductivity decreases.