The rapid degradation at 300°K in the cw regenerative output of stripe‐geometry GaAs double‐heterostructure junction lasers is shown to be a result of the formation of a local optical absorber in the laser cavity. Gain measurements performed on diodes before and after degradation show that the optical loss within the cavity increases during degradation. By observing the (predominantly) spontaneous emission from the active region directly through then‐GaAs substrate, it is confirmed that the increased loss is localized in a region where little or no spontaneous emission takes place at lasing energies. In such diodes, the internal radiative efficiency of the undegraded portion of the optical cavity shows a relatively small decrease compared to the external differential quantum efficiency. When the local absorber extends over a sufficient length of the cavity the electronic gain in the undegraded section is insufficient to overcome the loss and the device ceases to act as a regenerative optical oscillator. Net gain measurements on DH laser devices in which the active region is lightly (≈ 1017)n‐doped indicate that the optical gain increases linearly with current prior to degradation. At lasing threshold the medium exhibits net gain over a wavelength range of 100 Å. After degradation the gain dependence on current can become superlinear due to the saturation of the optical absorber. Estimates on the attenuation constant in the local absorber at low currents give a value of ≈ 60 cm−1at 8800 Å. For pulsed currents close to lasing threshold the attenuation constant increases to nearly 160 cm−1at 8760 Å.