We report evidence for quasicontinuous optical gain in CdS quantum dots fabricated by the sol‐gel process and embedded in glass. The gain spectra are obtained using the pump and probe technique and nanosecond (quasiresonant) excitation at 11 K. The dots are in the intermediate quantum confinement regime and the concentration of CdS is relatively high. The gain, which is spectrally broad, develops on the low energy side of the absorption band edge. The reason why the gain region is broad is not only the size distribution of the dots, but also the nature of the gain, which originates from the recombination of several excited levels between two and one electron‐hole pairs states (i.e., biexciton to exciton). The maximum measured gain reaches 200 cm−1at 11 K and 17 cm−1at 170 K. ©1995 American Institute of Physics.