GaN quantum dots embedded in nanowires have attracted much attention due to their superior optical properties. However, due to the large surface-to-volume ratio of the nanowire, the impacts of surface states are the primary issue responsible for the degradation of internal quantum efficiency (IQE) in heterostructured dot-in-nanowires. In this paper, we investigate the carrier recombination mechanism of GaN/AlN dot-in-nanowires with an in situ grown AlN shell structure. Ultraviolet photoelectron spectroscopy (UPS) measurements were performed to describe the band bending effect on samples with different shell thicknesses. Temperature-dependent photoluminescence (TDPL) data support that increasing the AlN shell thickness is an efficient way to improve internal quantum efficiency. Detailed carrier dynamics was analyzed and combined with time-resolved photoluminescence (TRPL). The experimental data are consistent with our physical model that the AlN shell can effectively flatten the band bending near the surface and isolate the surface non-radiative recombination center. Our systematic research on GaN/AlN quantum dots in nanowires with a core–shell structure may significantly advance the development of a broad range of nanowire-based optoelectronic devices.