An advanced light-fidelity (Li-Fi) system based on the blue Gallium nitride (GaN) laser diode (LD) with a compact white-light phosphorous diffuser is demonstrated for fusing the indoor white-lighting and visible light communication (VLC). The phosphorous diffuser adhered blue GaN LD broadens luminescent spectrum and diverges beam spot to provide ample functionality including the completeness of Li-Fi feature and the quality of white-lighting. The phosphorous diffuser diverged white-light spot covers a radiant angle up to 120 o with CIE coordinates of (0.34, 0.37). On the other hand, the degradation on throughput frequency response of the blue LD is mainly attributed to the self-feedback caused by the reflection from the phosphor-air interface. It represents the current state-of-the-art performance on carrying 5.2-Gbit/s orthogonal frequency-division multiplexed 16-quadrature-amplitude modulation (16-QAM OFDM) data with a bit error rate (BER) of 3.1× 10− 3 over a 60-cm free-space link. This work aims to explore the plausibility of the phosphorous diffuser diverged blue GaN LD for future hybrid white-lighting and VLC systems.