A 1.3-µm-wavelength InGaAsP/InP laterally coupled distributed feedback ridge laser with improved structure and characteristics is reported in this paper. For easier fabrication of the first order grating with 198 nm period on and beside the ridge waveguide side-walls, two-step etching has been used to form a narrow ridge waveguide with a special shape. The grating is patterned by electron beam lithography and deeply transferred also by two-step etching, in order to enhance the lateral evanescent field coupling. A stable CW laser oscillation with a low threshold current of 17 mA at room temperature and a high side mode suppression ratio of 45 dB for a laterally coupled distributed feedback ridge laser has been achieved. An external slope efficiency of 0.25 W/A and an output power of about 25 mW are also available in our most recent devices with anti-reflection and high reflection facet coatings. The optical transmission of a Gbit/s order modulated signal has also been tested using our preliminary laser modules through a 1 km optical fiber.