We observe the intercalation of 2D-magnesium into singlecrystalline gallium nitride which occurs spontaneously between the two dissimilar materials under atmospheric pressure. This is the first-of-its-kind observation of intercalation of 2D-metal into bulk semiconductor in which every single monolayer of magnesium is inserted into a few monolayers of hexagonal gallium nitride without causing volume expansion. As a result, the unprecedented high elastic strain of over -10% amongst thin film materials is sustained in the intercalated gallium nitride layers which modified the electronic band structure and improved the hole mobility (e.g., over 200% increase at low temperature), indicating a good agreement with the long-sought phenomenon of the reversal of crystal-field splitting due to the ultra-small c/a ratio. The simultaneous improvement of hole mobility, as well as hole concentration due to the increased magnesium acceptors, is demonstrated after intercalating 2D-magnesium into p-type gallium nitride. These unique features may shed light on the doping and conductivity enhancement of semiconductors as well as the elastic strain engineering of nanomaterials. The observed layered structure also provides a novel probe for studying the band structure and transport properties of metal/semiconductor superlattices.