Using Monte Carlo simulation combined with iterative solution of the Poisson equation the real‐space electron transfer (RSET) and negative differential conductivity (NDC) in GaAs–n‐AlxGa1−xAs heterostructures with electric field applied parallel to the layer interfaces have been investigated. The original Hess RSET model has been modified by considering graded AlxGa1−xAs layers with proper spatial dependence of the Al composition. Simulation results confirm that this modification enables one to avoid undesirable effects due to space‐charge fields: (1) Graded AlxGa1−xAs layers can be depleted in thermal equilibrium at higher donor concentrations than layers without compositional grading; (2) it is sufficient to use doped, but not compensated, AlxGa1−xAs layers because electron velocity in graded layers is low mainly due to electron transfer toLandXvalleys; and (3) there is no confinement of cold electrons in graded AlxGa1−xAs layers due to space‐charge fields when the RSET occurs. The RSET‐induced NDC and characteristic time constants have been found close to 1 ps at 77 and 300 K. Similar results have been obtained in the RSET model without compositional grading; however, highly compensated AlxGa1−xAs material was needed and the total number of free electrons was ten times lower.