The finite difference method was used to analyze the thermal characteristics of continuous wave 850 nm AlGaAs/GaAs implant-apertured vertical-cavity surface-emitting lasers (VCSELs). A novel flip-chip design was used to enhance the heat dissipation. The temperature rise in the active can be maintained below 40 degreesC at 4 mW output power with 10 mA current bias. By contrast, the temperature rise reaches above 60 degreesC without flip-chip bonding. The transient temperature during turn-on of a VCSEL was also investigated. The time needed for the device to reach the steady-state temperature was in the range of a few tenths of a millisecond, which is orders of magnitude larger than the electrical or optical switch time. Flip-chip bonding will reduce the shift of the wavelength, peak power, threshold current, and slope efficiency during VCSEL operation, (C) 2002 Published by Elsevier Science Ltd.