We present a simulation study on the chirping characteristics of a directly modulated 40 Gbps laser diode and evaluate its performance for use in high-speed optical fiber links. The effects of the linewidth enhancement factor (α) and gain suppression on the laser chirp and the maximum fiber transmission length are investigated. The chirp characteristics include the frequency peak-to-peak chirp of the time-varying frequency and shift of the emission wavelength. The performance of 40 Gbps optical fiber link is evaluated in terms of the eye diagram and quality factor of the received signal, which helps in predicting the maximum fiber length that achieves error-free transmission. The results show that when α increases from 1 to 10, the overshoots of the relaxation oscillations become strong, resulting in a sharp increase in laser peak-to-peak chirp from 21.8 to 205 GHz. The increase of gain suppression factor form ε = 0.5 × 10–17 cm3 to ε = 5 × 10–17 cm3 dampens out the overshoots and slightly reduces the peak-to-peak chirp from 19.5 to 193.3 GHz. Although the gain suppression works to reduce the laser chirp, it causes a significant wavelength shift relative to the emission wavelength of the non-modulated laser, which degrades the efficiency of the laser diode. On the other hand, the gain suppression is shown to increase the degree of eye-opening and the corresponding Q-factor of the fiber link on a reverse action of the linewidth enhancement factor. As fiber length increases, the influences of α and ε on chirp characteristics become more significant. The maximum fiber length (Lmax) is shown to decrease with the increase in α and/or ε; when α increases from 1 to 10, Lmax decreases from 5.89 to 0.78 km at ε = 5 × 10–17 cm3, and decreases from 2.52 to 0.3 km at ε = 0.5 × 10–17 cm3.