A one‐dimensional analytical model of 2DEG‐FETs has been developed in which the effect of the source‐gate resistance Rsq and velocity saturation are included. When the electron mobility μ, the electron drift peak velocity Ve, the source‐gate resistance Rsg and the AlGaAs film thickness d are varied, the corresponding transconductance gm and the conductance coefficient K are numerically studied in detail. With the present model, the device characteristics of the “MIS”‐like 2DEG‐FET with a thick n+‐GaAs cap layer and an undoped AlGaAs gate have been analyzed. From the point of application of 2DEG‐FETs to a high speed LSI, the design guideline of the device has been studied. For the device parameters of the gate length Lg = 0.2 μm, the transistor width W = 10 μm, Rsg = 15 Ω, d = 22 mm, μ = 8000 cm2/Vs and Ve = 2 × 107 cm/s, the expected device characteristics are K = 10.0 mA/V2, the sourcegate capacitance Cgs = 10.0 fF, gm = 700 mS/mm and fT = 110 GHz.