We describe a method of lateral band gap modulation by creating steep lateral strain gradients in multiquantum (MQW) structures on InP. The strain modulation is obtained by controlled elastic relaxation of micromachined free‐standing strained MQW stacks. Large lateral energy modulation is achieved, suitable for lateral optical mode confinement and lateral quantum confinement of excitons. It is pointed out that this technology can be applied in monolithic integration of semiconductor optical devices. ©1995 American Institute of Physics.