The B3-GaN thin film was investigated by performing large-scale molecular dynamics (MD) simulation of nanoindentation. Its plastic behavior and the corresponding mechanism were studied. Based on the analysis on indentation curve, dislocation density, and orientation dependence, it was found that the indentation depths of inceptive plasticity on (001), (110), and (111) planes were consistent with the Schmid law. The microstructure evolutions during the nanoindentation under different conditions were focused, and two formation mechanisms of prismatic loop were proposed. The “lasso”-like mechanism was similar to that in the previous research, where a shear loop can translate into a prismatic loop by cross-slip; and the extended “lasso”-like mechanism was not found to be reported. Our simulation showed that the two screw components of a shear loop will glide on another loop until they encounter each other and eventually produce a prismatic dislocation loop.