Quasi‐phase‐matched second‐harmonic generation is observed in an AlGaAs waveguide. The AlGaAs waveguide is epitaxially grown on a template substrate where a periodic crystal domain inversion is achieved using wafer bonding and organometallic chemical vapor deposition. A scanning electron micrograph of the waveguide cross section reveals a distinct propagation of the crystal domain boundaries in the epitaxial growth direction. Second‐harmonic generation measurements on a fabricated rib‐loaded waveguide show a clear quadratic dependence of the second‐harmonic power to the input fundamental power. The peak conversion efficiency is 4.9%/W whereas the theoretical value is 124%/W for an ideal waveguide with no loss and with equal domain dimensions. A significant increase in the conversion efficiency is expected with reduced scattering losses realized by improved epitaxial growth and fabrication processes. ©1995 American Institute of Physics.