A large‐signal theory of oscillator noise is presented, which is applicable to oscillators employing active elements that can be described by a time‐dependent differential equation with a Langevin noise source. The method uses a modified quasistationary perturbation theory with an rf amplitude‐dependent perturbing noise voltage (current) source, which has been mathematically expressed in terms of the ``initial'' (preoscillation) amplitude and phase noise modulation rates. The usual requirement that this noise voltage (current) be a member of a normal random process, which results in equality of the two initial power spectra, is not invoked here. The rf amplitude dependence of the open‐circuit perturbing noise voltage (short‐circuit noise current) has been obtained from the differential equation of the active element, under the condition of sinusoidal current (voltage) excitation at the frequency at which it would normally oscillate. Upon linearizing in stochastic quantities, expanding the deterministic terms by means of Fourier series and Fourier transforming the result, a system of linear equations in the frequency domain is obtained for the noise voltages (currents) at frequencies about multiples of the excitation frequency and at the baseband frequency. In this way, most of the conversion processes in the active element can be taken into account. The Fourier transforms and power spectra of the initial modulation rates have been determined in terms of the upper‐ and lower‐sideband noise voltages (currents); they are used in the modified formulas of a quasistationary perturbation theory to obtain the AM and FM noise spectra of the oscillator output. The theory has been applied to IMPATT diode oscillators and the computed spectra have been compared with various experimental data. A good agreement between the theoretical predictions and experimental data has been found. Additional insight into IMPATT diode noise has been provided, since the above method has made it possible to separately evaluate the dependence of the AM and FM noise spectra on the rf output power of the oscillator as well as on other diode and circuit parameters. As a result, guidelines have been obtained for determining the optimum parameters of an IMPATT diode oscillator, for minimum noise.