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The excess noise of semiconductor lasers has been reduced mostly with the help of the self‐sustained pulsation in experiments. A theoretical analysis is given for mechanisms of the noise generation and the reduction method basing on the mode competition theory. Basic equations of these dynamics are given in the form of rate equations, where the nonlinear gain terms and Langevin noise sources are included. Effect of the optical feedback is introduced to give changes in the threshold gain level and by building of external cavity modes formed by the facet of the laser and the reflecting surface. The self‐sustained pulsation phenomena are examined in the narrow stripe structure geometries having the saturable absorbing region beside the active region. The amount of noise is expressed relating to time averaged values of the photons and the carrier densities in laser, whose levels are modified by the pulsation. It is shown that the excess noise due to mode competition among the internal cavity modes is well suppressed by the self‐sustained pulsation, while noise due to mode competition among the external cavity modes is mostly suppressed but sometimes not suppressed. More general discussions for the mechanisms are also given qualitatively by help of topological charts for dynamics. Three types of mode competitions are indicated. The first one is with a bistable state due to the symmetric profile of gain suppression for wavelength distribution. The second one is with an elliptic eddy motion of dynamics due to weak asymmetric property of the gain suppression. The third one is with a circular eddy motion of dynamics due to the strong asymmetric property of the gain suppression. Some difficulty in the noise reduction in the case of the strong asymmetric property of the gain suppression is mentioned. © 1996 American Institute of Physics.