The spectral gain characteristics of dilute-nitride zinc blende InxGa1-xNyAs1-y quantum wells embedded in GaNy1As1-y1 barriers have been investigated experimentally and theoretically. Two samples, both with the gain peak at 1300nm, were studied for comparison. One has a high nitrogen concentration in the quantum well with the surrounding barriers being pure GaAs. The other has a lower and uniform nitrogen concentration in the quantum well and the barriers (GaNAs barriers). Measurements show the redshift of the gain peak induced by the incorporation of nitrogen and difference in the spectral gain characteristics. The energy band structures and spectral gain characteristics are analyzed theoretically using the standard eight-band k∙p theory. It is shown that the introduction of nitrogen atoms in the GaAs barriers reduces the barrier height for the central quantum well so that the energy sublevels in the conduction band becomes condensed. The condensation of the conduction-band energy sublevels reduces the peak gain and makes the gain spectrum narrower, in agreement with measurements.