In this paper, the authors show how selective undercut etching of InGaAs- and InGaAsP-based quantum wells (QWs) can improve the performance of InP-based optoelectronic devices. First, wet-chemical-etching characteristics are investigated. Mixtures of sulphuric and hydrogen peroxide acids are used as wet-etching solutions, and properties such as etch rates, selectivity, and anisotropy are studied in detail. Problems arising from the anisotropic nature of the etching are analyzed, and their impact on device design and performance is discussed. Second, the authors present several optoelectronic devices where selective undercut etching of InGaAs- or InGaAsP-based multiquantum wells (MQWs) improves device performance; these devices include electroabsorption modulators (EAMs), vertical-cavity semiconductors optical amplifiers (VCSOAs), and waveguide amplifier photodetectors (WAPs). Very high extinction ratios were obtained for the EAM. A selective undercut-etched VCSOA reached a record-high 17-dB fiber-to-fiber gain, and the WAP demonstrated an external quantum efficiency higher than 100%.