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In this paper, we present a finite-difference time-domain formulation for active gain materials. Our scheme is based on a frequency-dependent conductivity. Experimental material gain is fitted with high accuracy to a multipole Lorentzian model using a semideterministic fitting algorithm. Because our model is an approximation to the full vectorial Maxwell's system of equations, we include carrier diffusion into the rate equations for a two-level system. The material gain is included into the standard set of Maxwell's equations by linking the frequency-dependent conductivity to the rate equations. Lasing is demonstrated for a vertical-cavity-surface-emitting-laser structure and photonic crystal lasers.