In this paper, we first propose a novel composite nuclear fuel of UO2-GaN, which has never been reported before, and then its fully coupled multiphysics fuel performance is investigated using the CAMPUS code developed by ourselves. We propose two different fabrication methods to obtain the UO2-GaN fuel, which are Green Granule/Slug Bisque and Spark Plasma Sintering, respectively, resulting in different fuel thermal conductivities. By comparing two kinds of UO2-GaN fuel which are fabricated by two methods, we found that fuel fabricated by Green Granule/Slug Bisque possesses high thermal conductivity and performs well during the reactor operation. The gap width, gap conductance, fission gas release, plenum pressure, deviation of oxygen to metal ratio and displacement are all studied in this work. The performance of this novel fuel is also compared with the traditional UO2 fuel. The UO2-GaN enhanced thermal conductivity composite fuel shows the potential of decreasing the fuel temperature, and improving fuel performance and reactor safety. This makes GaN a good candidate to fabricate composite fuel with UO2 from the thermal standpoint. However, this work is to conduct an exploratory approach to the effect for the GaN addition to UO2 fuel with very limited data. So, further studies are still needed on GaN’s compatibility with UO2, neutronic behavior, fission product retention capabilities and irradiation performance, both on experimental measurements and numerical simulations.