The plasma dispersion effect and free-carrier absorption in strained SiGe are analyzed using the six-band k·p method and the Drude model. Since the hole conductivity mass of SiGe is decreased by applying compressive strain, enhancement of the plasma dispersion effect, and free-carrier absorption in strained SiGe is expected. We predict that Si0.5Ge0.5 coherently grown on Si will exhibit three times higher plasma dispersion and four times higher free-carrier absorption than Si. The modulation characteristics of SiGe quantum well metal-oxide-semiconductor (MOS) optical modulators are also analyzed by technology computer-aided design simulation and finite-difference optical mode analysis. An extremely small VπL of 0.033 V-cm is predicted in the case of a compressively strained Si0.5Ge0.5 quantum well in conjunction with a high-k gate dielectric MOS structure. The enhancement of free-carrier absorption in the SiGe high-k MOS modulator also makes in-line intensity modulation feasible and an intensity modulation efficiency of 9 dB/mm/V is predicted.