By adjusting the carrier confining structure and the optical confining structure of strained InGaAs/AlGaAs single quantum well (QW) lasers, an improvement in performance has been obtained. First, the influence of optical confinement was examined by comparing two graded‐index confining structures. For InxGa1−xAs QWs with either x=0.20 or x=0.25, lasers with greater optical confinement factor had improved performance, with both lower threshold (180 A/cm2 for x=0.20) and higher characteristic temperature (250 K for x=0.20), despite their reduced carrier confining potentials. Second, experiments on graded‐composition quantum wells show that thin step‐grading layers result in improved performance. In this structure, where the QW has x=0.35, and the step layers have x=0.15, the optimum step thickness is 30–40 Å. Thicker step layers appear to create too much strain, degrading the laser operation. These results indicate that step grading of strained QWs produces active region interfaces with lower defect density, and that step grading is especially useful in improving the performance of long‐wavelength, highly strained InGaAs/AlGaAs QW lasers.