The dc characteristics of modulation‐doped AlxGa1−xAs/GaAs field‐effect transistors have been studied experimentally and theoretically to determine the effect of the thickness of the undoped AlxGa1−xAs spacer layer commonly left at the heterointerface. Increasing the thickness of the spacer layer decreases charge transfer and increases mobility. Current transport in short channel transistors, however, is limited by the electron saturation velocity which is independent of the spacer thickness. Due to increased charge transfer, decreasing the spacer thickness from 100 to 20 A˚ doubled the maximum saturation current and transconductance. This should allow faster switching speeds to be obtained. A maximum current of 24 mA was obtained for a gate width of 145 &mgr;m with a 40‐A˚ spacer and a transconductance of 250–275 mS/mm was obtained for a device with a 20‐A˚ spacer. Theoretical results indicate that intrinsic transconductances greater than 900 mS/mm are possible. Preliminary small‐signal rf measurements indicate a maximum available gain of about 9 dB at 8 GHz.