As a new method to improve pulse code modulation properties of semiconductor lasers, optical feedback is proposed where a part of the light output from a modulated laser is fed back into itself, with a time delay considerably less than one relaxation oscillation (RO) period. Rate equation approach is applied to investigate the modulation characteristics. Modulation bit rates for small pattern effects depend on the RO period and the current pulse width, and they appear discontinuously. By optical feedback, the RO period increases, and it becomes possible to decrease pattern effects at any given modulation period, if it is larger than the RO period without optical feedback. For current pulses with a short duration, output waveforms are improved by optical feedback through increase in the first RO spike width and elimination of its second spike. In preliminary experiments, using GaAs-AlXGa1XAs double heterostructure lasers with a combination of a microlens and a flat mirror, qualitative agreements were obtained between theoretical and experimental results. Improvements in the modulated output waveforms were observed for PCM-RZ pulses at up to 500 Mb/s.