A microscopic approach for the computation of semiconductor quantum well laser power spectra is presented. The theory is based on nonequilibrium Green’s function techniques that allow for a consistent description of the coupled photon and carrier system fully quantum mechanically. Many-body effects are included through vertex corrections beyond the random-phase approximation. Band structure engineering is incorporated in the theory as dictated by the coupled band solutions of the Luttinger Hamiltonian. The influence of the detailed cavity-mode structure is accounted for by the photon Green’s function. The theory describes the interplay among the various many-body, quantum-confinement, and band structure effects in the gain medium and its action as a laser cavity. Numerical results for the recombination rates, optical response, and laser output power spectra are presented for strained-layer and lattice-matched III-V systems at quasiequilibrium with variable design and material parameters and under different excitation conditions. Active optical switching is demonstrated in specially designed structures.