Short pulse sources are finding a wide range of applications in high bit rate and soliton fiber optic communication systems. Dye lasers and solid state lasers can generate such short pulses; however, their size and energy consumption make it less desirable to include them in practical systems. A monolithic semiconductor source is the most attractive option, because it is both small and efficient. We present a theory for passive mode-locking in semiconductor lasers including the effects of self-phase modulation, dispersion and pulse collisions. Material parameters and different configurations, such as Fabry-Perot and ring lasers, are considered and the stability for mode-locked operation is quantified. A ring configuration is found to have the largest range of stable mode-locking operation. Finally we present results of colliding pulse mode-locking in lasers consisting of monolithically integrated gain, absorption and passive waveguide sections. The lasers, operating around 1.3 micrometer wavelength, consist of InGaAsP active and guiding regions grown on InP, with ridges defined by reactive ion etching. Pulses as short as 560 fs, measured by intensity autocorrelation, have been produced. It is shown that the length of the pulse is not limited by the absorber length, but by the spectral width of the active material, as predicted by the theoretical model.