The dependence of relaxation oscillation on carrier diffusion length in AlGaAs lasers is analyzed using multimode rate equations containing carrier diffusion and spontaneous emission terms. A parameter representing coupling between carrier and light field distribution is introduced. The carrier diffusion shortens the delay time, the relaxation oscillation period, and the decay time constant and also makes spectral narrowing faster. The damping factor is enlarged and relaxation oscillation is suppressed as the carrier diffusion length becomes large. The diffusion length, normalized by stripe widthLD/W, is estimated to be about 0.6 by comparing the numerical results with the experimental tendency of transient response. Furthermore, relaxation oscillation is suppressed as the oscillation beam spot size becomes smaller.