This letter describes a microscopic gain theory for an InGaN/AlGaN quantum well laser. The approach, which is based on the semiconductor Bloch equations, with carrier correlations treated at the level of quantum kinetic theory in the Markovian limit, gives a consistent treatment of plasma and excitonic effects, both of which are important under lasing conditions. Inhomogeneous broadening due to spatial variations in quantum well thickness or composition is taken into account by a statistical average of the homogeneously broadened spectra. ©1997 American Institute of Physics.