The microwave terminals, satellite ground stations, and CATV industries demand wideband, high-frequency communication links. A very-low-mesa-stripe Gai_xAlxAs-Gai_yAlyAs double-heterostructure (DH) injection laser diode (ILD), and a silicon avalanche photodetector (APD) have been utilized in a 500-MHz fiber-optic system to demonstrate high-frequency feasibility. The ILD, capable of being modulated up to 700 MHz with 1.25-dB/octave rolloff, coupled 4.9 mW into a single Corning low-loss fiber with microlens formed at the input end. Above 700 MHz, the distortion becomes severe due to relaxation oscillation. The frequency-dependent nonlinearity of ILD, which can be compensated by a special circuit design, has been analyzed by Volterra series. Using a gain equalization circuit in both the ILD transmitter and APD receiver, the system has very flat response up to 270 MHz and usable response to 500 MHz (S/N = 56 dB). Above 270 MHz, the gain is reduced due to the characteristics of the APD. With two tones (90 and 125 MHz), the system has an S/N (each tone) of 58 dB in 100-kHz bandwidth measurements. Without nonlinear compensation, the second- and third-order intermodulation products (IMP's) are 24 dB below the carrier. Presently, with special compensation network, IMP's of 33 dB below the carriers are obtained.