This study focuses on the heavily Mg-doped GaN in which the passivation effect of hydrogen and the compensation effect of nitrogen vacancies (V_N) impede its further development. To investigate those two factors, H ion implantation followed by thermal annealing was performed on the material. The evolution of relevant defects (H and V_N) was revealed, and their distinct behaviors during thermal annealing were compared between different atmospheres (N₂/NH₃). The concentration of H and its associated yellow luminescence (YL) band intensity decrease as the thermal annealing temperature rises, regardless of the atmosphere being N₂ or NH₃. However, during thermal annealing in NH₃, the decrease in H concentration is notably faster compared to N₂. Furthermore, a distinct trend is observed in the behavior of the blue luminescence (BL) band under N₂ and NH₃. Through a comprehensive analysis of surface properties, we deduce that the decomposition of NH₃ during thermal annealing not only promotes the out-diffusion of H ions from the material, but also facilitates the repair of V_N on the surface of heavily Mg-doped GaN. This research could provide crucial insights into the post-growth process of heavily Mg-doped GaN.