This paper presents numerical modeling on the noise properties and signal distortion associated with millimeter‐frequency modulation of vertical‐cavity surface‐emitting laser (VCSEL) under with a transverse‐coupled cavity. The study is based on a time‐delay rate equation model that takes into account the multiple round trips in the feedback cavity and the optical loss and phase delay in each round trip. Strong slow‐light feedback is found to boost the modulation bandwidth to frequencies approaching 70 GHz and induce resonance modulation due to photon–photon resonance (PPR) over passbands centered on frequencies reaching 90 GHz. We show that the relative intensity noise of the VCSEL with resonance modulation is enhanced when the noise frequency approaches the corresponding PPR frequency VCSEL. The same effect applies for the VCSEL with extended carrier‐photon resonance (CPR) at the CPR frequency. The low‐frequency part is characterized by flat (white) noise of level nearly equal to −140 dB/Hz. The second‐harmonic distortion (2HD) values are smaller than −10 dB under small‐signal modulation and increase to lower than −5 dB when the modulation index becomes 0.3. Copyright © 2015 John Wiley & Sons, Ltd.