Perovskite light‐emitting diodes (PeLEDs) are promising candidates for lighting and display applications. However, perovskites usually have a relatively high refractive index compared to organic semiconductors, causing a lower optical efficiency due to a narrower escape cone. In this work, the theoretical analysis shows that the microcavity effect enables PeLEDs to achieve a light extraction efficiency of 51%, much higher than the ≈20% estimated by the classical theory. Besides the interference in the microcavity, the efficiency improvement is also attributed to the low surface plasmon loss and a high ratio of horizontal dipoles under the Purcell effect. In a microcavity PeLED, a horizontal dipole shows three times the improvement in the Purcell factor of a vertical dipole, making the horizontal dipole with high efficiency contribute 86% of light output. Moreover, the experiment shows that the microcavity can increase the external quantum efficiency by 70%. A narrower spectrum and shorter photoluminescence lifetime are also observed. These phenomena are attributed to the simultaneous enhancement of light extraction efficiency and internal quantum efficiency. This work reveals the importance of microcavity design and provides guidance to break through the classical efficiency limit and achieve high‐efficiency PeLEDs.