Population inversions for optical transitions in the VUV and soft x‐ray spectral region are predicted theoretically for decaying plasmas. The calculations are based upon a quasisteady‐state theory for hydrogenlike ions. In contrast to other approaches it is shown that the characteristic relaxation time to generate inversions is not that of the corresponding upper levels but that of the ground state of the ions, i.e., the relaxation time for recombination. A plasmadynamic laser system for cw operation in the VUV is proposed.