We study optical properties of ZnMgSSe‐ZnCdSe structures with CdSe submonolayers inserted in a ZnSe matrix. Remarkably high exciton oscillator strength is found in ultrashort‐period submonolayer CdSe‐ZnSe superlattices, as compared to ZnCdSe quantum wells of comparable average width and Cd composition. In conventional ZnCdSe quantum wells the lasing occurs at energies ∼30 meV below the free heavy‐hole exciton transition revealed in photoluminescence and in optical reflectance spectra. In the CdSe submonolayer superlattices lasing occurs at energies in the very vicinity of the heavy hole exciton resonance, directly in the region of strongly‐enhanced exciton‐induced modulation of the reflectance spectrum, and, consequently, refractive index change. We attribute the effects observed to exciton localization by potential fluctuations caused by nanoscale CdSe islands formed during submonolayer deposition. ©1996 American Institute of Physics.