In this paper, the physical mechanism governing the optical modulation in a p-i-n-diode-embedded photonic crystal (PC) silicon Mach-Zehnder interferometer modulator is examined. Optical simulations have been performed to study how the slow group velocity of the photonic crystal waveguides enables a significant reduction of device size. The theoretical speed limitation in a PC-based silicon modulator is also explored. The 2-D semiconductor device simulator MEDICI has been employed to analyze the transient behavior of the p-i-n-diode-embedded silicon modulator. Electrical simulations have revealed a significant improvement in modulation speed upon the enhancement of current density in a downscaled PC device. High-speed optical modulation at 1 Gmiddots-1 has been experimentally demonstrated. The performance degradation in optical modulation at the low-frequency operation region attributed to the thermooptic effect is identified and discussed. Simulations have also revealed that the modulation speed of our device can be improved up to 10 GHz by further reducing the device dimensions with little penalty of the increased optical loss.