We have fabricated AlGaN/GaN HEMTs with a thin InGaN cap layer to implement normally-off HEMTs with a small extrinsic source resistance. The key idea is to employ the polarization-induced field in the InGaN cap layer, by which the conduction band is raised leading to the normally-off operation. Fabricated HEMT with an In0.2Ga0.8N cap layer with a thickness of 5 nm showed normally-off operation with a threshold voltage of 0.4 V and a maximum transconductance of 85 mS/mm for the device with a 1.9-µm-long gate. By etching-off the In0.2Ga0.8N cap layer at the region except under the gate using gate and ohmic electrodes as etching masks, the sheet resistance has decreased from 2.7 to 0.75 kΩ/, and the maximum transconductance has increased from 85 to 130 mS/mm due to a reduction of the extrinsic source resistance. The transconductance was increased from 130 to 145 mS/mm by annealing the devices at 250 for 20 minutes in a N2 atmosphere.