Modulating electrical characteristics of zinc oxide (ZnO) thin-film transistors (TFTs) through gate dielectric thickness is expected to compensate for short-channel effects (SCEs) for driving Micro-LEDs. Here, we first design the ZnO TFTs with thinner dielectric to relieve threshold voltage ( ${V}_{\text {TH}}{)}$ roll-off and subthreshold swing (SS) degradation as the channel length scales down to a few micrometers. The proposed compensation method was then demonstrated and verified by fabricating ZnO TFTs with various gate dielectric thicknesses. The ${V}_{\text {TH}}$ roll-off and SS degradation can be avoided, and ${I}_{\text {ON}} / {I}_{\text {OFF}}$ ratio can be improved by an order of magnitude, which is of particular interest for shorter channel ZnO TFTs. By solving the current density equation, it has been found that a higher electric field and a higher current density form near ZnO/Al2O3 interface when the gate dielectric thickness decreases. Moreover, the first-principle calculations reveal that localization of transmission eigenstates at the semiconductor–insulation interface with thinner dielectric layer provides a better conductive channel for TFTs. This work offers deep insights into compensating for the SCEs through the multiscale simulation and experimental verification.