Lateral mode analysis of buried heterostructure-type index guided diode lasers is presented using the finite-element method. The vectorial and the approximate scalar finite-element methods based on a Galerkin's procedure are formulated for the analysis of the waveguides composed of active or lossy media. By using these methods, the accuracy of the effective refractive index method, which has been widely used, is investigated in detail and the limit of this approximate method is indicated. Furthermore, the modal gain and its difference between the fundamental and the higher order modes, which may be important for the design of diode lasers, are evaluated for GaInAsP/ InP buried heterostructure diode lasers. As a result, the finite-element method, especially the approximate scalar finite-element method, is found to be useful for the lateral mode analysis of diode lasers, and suggested the possibility as a means for device simulation techniques.