We experimentally demonstrate signal gain for picosecond signals due to an orthogonally polarized pump beam in an AlGaAs channel waveguide at a wavelength of 1.55 &mgr;m, below half the band gap. We show as much as 40% signal gain, or depletion, depending on the polarization states of the pump and the probe. The results are in good agreement with theory. ©1995 American Institute of Physics.