The refractive index in a traveling‐wave semiconductor waveguide amplifier changes with light injection at intensities close to the saturation intensity due to light‐induced changes in the carrier density. The saturation‐induced optical switching in an active directional coupler switch based on this effect is investigated. The system can switch from a cross state at a low input power to a bar state at a high input power. This device may be used as a power‐limiting directional coupler switch with gain in a local area network.