We investigate the SU(2) gauge theory with the domain-wall fermions. Our previous simulations with many flavors of the standard domain-wall fermions suffered from rather large residual mass that obstruct the study in the small mass region. To improve the domain-wall fermion action, we employ the link smearing technique that consists of the HYP smearing and the stout projection. On the previously generated configurations with the two flavors of the standard domain-wall fermions, we confirm that the improved domain-wall fermion operator indeed reduce the residual mass to a factor of five. Dynamical simulations with two flavors of improved domain-wall fermions are in progress.