Wet oxidation is used for current confinement in 850 nm vertical cavity surface emitting laser (VCSEL) structure. Annealing of wet oxide in nitrogen environment was done at different temperatures. Significant improvement (approximately 18% increase) in VCSEL optical emission power is observed after annealing for 1 h at 400degreesC. From isothermal annealing experiment, it is concluded that the devices annealed at 400degreesC has the maximum annealing rate. From the capacitance versus voltage curve it is observed that negatively charged bulk traps and interface states decrease due to annealing. (C) 2003 Elsevier Science Ltd. All rights reserved.