In this paper, digital modulation performance of two‐section, multiple quantum well gain‐levered laser diode in a fiber optic link is analyzed. This study involves numerical simulation of gain‐levered laser diode along with single‐mode fiber for evaluating gigabit rate digital transmission. The optical link performance is analyzed by evaluating the eye diagram, extinction ratio, and quality factor for different bit rates, modulation current, and fiber lengths. The results are compared with unlevered or normal laser diode–based fiber optic link with similar operating conditions. A 12‐dB improvement in extinction ratio is obtained for gain‐levered laser diode when the longer section and shorter section currents are kept as 30 and 0.5 mA, respectively. The Q parameter is found to increase with increasing modulation current in the gain‐levered case, and a maximum Q factor of 11 is obtained for a modulation current of 5 mA. The Q value is improved by a factor of 8 and 5 at 1‐ Gbps and 10‐Gbps data rates, respectively, under gain‐levered condition, when compared to normal laser diode–based link.