Catastrophic optical damage (COD) in Al-free InGaAs/InGaP 0.98 &mgr;m lasers has been investigated using real-time electroluminescence (EL) and transmission electron microscopy (TEM). From EL images, we observed that multiple bright spots initiated from one of the facets and then propagated to the center of the cavity during the COD process. It is clarified by the TEM analysis that the propagation of bright spots resulted in 60-nm-wide Moire´ fringe along the cavity and the crystalline phase of the active area became polycrystalline. Highly nonradiative polycrystalline phase of the active area is the major cause of COD failure in the Al-free 0.98 &mgr;m lasers. ©1998 American Institute of Physics.